The Cleveland Fed are forecasting tomorrow's CPI inflation numbers at;

+5.22% YoY (prev. +5.99%) for the Headline number.

+5.66% YoY (prev. +5.53%) for the Core number.

Headline projected to come down significantly versus prior, but core to remain elevated (Fed prefer core). Elevated core inflation will likely translate to speculation on another 25bps hike in May...

Some quick stats on the past ~12 months of Cleveland Fed inflation forecasts.

💡 Since April '22, actual data has printed in-line or below the Cleveland Fed's headline forecast 73% of the time.

💡 Since September '22, the Cleveland Fed's forecast has overestimated Core CPI 100% of the time.

On this event forcing higher prices for risk assets; I'd think that the market wants to see core print lower than consensus and ideally, lower than the previous month (+5.53%).

Worth noting that last month, the Fed's preferred measure of inflation, PCE, rose by less than expected + posted it's smallest increase since October '21.

And that is suggestive of faster than expected disinflation + fuels speculation that the Fed are close to ending their tightening cycle.

HOWEVER, tomorrow's CPI print could buck that trend and point to higher PCE inflation later in the month (PCE is correlated with and lags CPI).

Inflation data has set short-term trends all throughout this tightening cycle and this time should be no different!