A major alert for next week: U.S. October CPI will be released Tuesday at 9:30 p.m. This is the last key inflation report before the Fed’s December rate-setting meeting.
Markets currently expect CPI to rise 0.3% month over month, with core CPI up 0.2%. Looking back at September, both CPI and core inflation came in above expectations, sending Bitcoin sharply lower in a short time. This time there’s an unusual wrinkle: because of last year’s government shutdown during the same period, the official year-over-year figures won’t be released, so markets will focus entirely on the month-over-month numbers.
Last Friday, nonfarm payrolls far exceeded expectations, with 165,000 jobs added versus a forecast of 65,000. The market-implied probability of a 25-basis-point rate hike in December has now reached 75%. If CPI rises again this time, expectations for a rate hike will become even more entrenched. Only if core inflation comes in at 0.2% or lower will the outlook for December rates become uncertain again.
A core inflation reading of 0.2% versus 0.3% is a difference of just 0.1 percentage point, yet it could lead to dramatically different market moves. Volatility is likely to spike around the release, so it’s best not to make a large bet before the results are in.
So what do you think: will core CPI come in at 0.2% or 0.3%?
#CPIOutlook #BTC
Markets currently expect CPI to rise 0.3% month over month, with core CPI up 0.2%. Looking back at September, both CPI and core inflation came in above expectations, sending Bitcoin sharply lower in a short time. This time there’s an unusual wrinkle: because of last year’s government shutdown during the same period, the official year-over-year figures won’t be released, so markets will focus entirely on the month-over-month numbers.
Last Friday, nonfarm payrolls far exceeded expectations, with 165,000 jobs added versus a forecast of 65,000. The market-implied probability of a 25-basis-point rate hike in December has now reached 75%. If CPI rises again this time, expectations for a rate hike will become even more entrenched. Only if core inflation comes in at 0.2% or lower will the outlook for December rates become uncertain again.
A core inflation reading of 0.2% versus 0.3% is a difference of just 0.1 percentage point, yet it could lead to dramatically different market moves. Volatility is likely to spike around the release, so it’s best not to make a large bet before the results are in.
So what do you think: will core CPI come in at 0.2% or 0.3%?
#CPIOutlook #BTC