When it comes to CPI, seasoned traders all have one bad habit: they open positions before the data comes out.
At 8:30 a.m. Eastern time on November 10—9:30 p.m. in China, after converting for standard time—the U.S. will release October CPI. First, an odd detail: the government shutdown last October meant the BLS didn’t collect price data, so the year-over-year figure for October won’t be published. This time, we can only look at the monthly change.
What’s the market expecting? According to BigGo’s roundup, the forecast is +0.3% for headline CPI and +0.2% for core CPI, compared with +0.6% and +0.3%, respectively, in September. RBC expects both headline and core to come in at +0.3%. The Cleveland Fed’s nowcast is lower, at around 0.24% for headline and 0.21% for core. The estimates are fairly close, which means a surprise of just 0.1 percentage point could send the market into a frenzy.
Why is everyone so sensitive? Because a December rate hike is already priced in. The Fed raised rates to 3.75%–4.00% in September, then held steady on October 28, though two officials voted for a hike. Chair Wash made no commitment about December, saying the decision would depend on the data. The meeting is scheduled for December 8–9. According to BigGo, on November 6 the market put the odds of a hike at around 77%, compared with roughly two-thirds before the jobs report.
Following that line of thought, my take is that this isn’t a bet on whether CPI will be high or low, but on whether it will surprise. If it comes in hot, the odds of a hike could climb above 80%, and risk assets could take another hit. If it comes in cool, that may only unwind some of the bets already in place. This is a scenario, not a forecast. Also, according to BigGo, Waller and the president of the Philadelphia Fed are due to speak after the CPI release, which could trigger a second wave of volatility.
I don’t know how it’ll play out, but on data night, sleep is more valuable than a position. Keep leverage low, set your stop-loss first, then go to bed.
Do you think this CPI will come in hot, cool, or just right?
$BTC
#CPI
#cpi前瞻，12月利率走向迎关键考验
At 8:30 a.m. Eastern time on November 10—9:30 p.m. in China, after converting for standard time—the U.S. will release October CPI. First, an odd detail: the government shutdown last October meant the BLS didn’t collect price data, so the year-over-year figure for October won’t be published. This time, we can only look at the monthly change.
What’s the market expecting? According to BigGo’s roundup, the forecast is +0.3% for headline CPI and +0.2% for core CPI, compared with +0.6% and +0.3%, respectively, in September. RBC expects both headline and core to come in at +0.3%. The Cleveland Fed’s nowcast is lower, at around 0.24% for headline and 0.21% for core. The estimates are fairly close, which means a surprise of just 0.1 percentage point could send the market into a frenzy.
Why is everyone so sensitive? Because a December rate hike is already priced in. The Fed raised rates to 3.75%–4.00% in September, then held steady on October 28, though two officials voted for a hike. Chair Wash made no commitment about December, saying the decision would depend on the data. The meeting is scheduled for December 8–9. According to BigGo, on November 6 the market put the odds of a hike at around 77%, compared with roughly two-thirds before the jobs report.
Following that line of thought, my take is that this isn’t a bet on whether CPI will be high or low, but on whether it will surprise. If it comes in hot, the odds of a hike could climb above 80%, and risk assets could take another hit. If it comes in cool, that may only unwind some of the bets already in place. This is a scenario, not a forecast. Also, according to BigGo, Waller and the president of the Philadelphia Fed are due to speak after the CPI release, which could trigger a second wave of volatility.
I don’t know how it’ll play out, but on data night, sleep is more valuable than a position. Keep leverage low, set your stop-loss first, then go to bed.
Do you think this CPI will come in hot, cool, or just right?
$BTC
#CPI
#cpi前瞻，12月利率走向迎关键考验
