Insight into US CPI Data: Anticipating Market Moves
Key Statistics:
- Source: Bureau of Labor Statistics, US Department of Labor
- Release Period: October 2024
- Last Release Date: October 10, 2024
- Actual: 2.4% vs Forecast: 2.3%. Previous: 2.5%
Forecast for October: 2.6%
Release Date: November 13, 2024, at 08:30 AM ET
Understanding the Consumer Price Index (CPI) is crucial as it reflects changes in the cost of goods and services bought by consumers, making it a significant indicator of inflation. Central banks use this data to make decisions on interest rates to maintain inflation within desired levels.
Key Highlights:
- Expected US CPI: 2.6% YoY headline inflation, 3.3% YoY “core” inflation
- Consistent rise in October compared to September
- Fed’s focus on controlling inflation, with a dovish stance from Powell
- Yield on benchmark rising to 4.43%, nearing a 4-month high
- Following CPI release, 4 Fed speakers scheduled on Wednesday
- US and Asian stock markets influenced by inflation concerns
Probability of US Interest Rate Changes:
- Chances of a 25 bps rate cut in December 2024: 59%
Technical Analysis Perspective:
- Historically, the 2.2% to 2.9% range in US Core CPI has been significant since 1994
- Key support at 2.3% in Dec 1994 led to a rise to 2.9% in Nov 1995
- Various instances of resistance at magic levels affecting inflation trends
- Probability of 2.3% being a strong support level post-August 2024
- Expectation of gradual increase in Core CPI towards 2.6% to 2.9%
US Core CPI YoY Chart with University of Michigan 1-y Inflation Expectation
Conclusion:
The historical trend of Core CPI values indicates a potential rise from 2.3% to 2.4% towards 2.6% to 2.9% in the coming months. With inflation becoming a focal point post-US election, the October inflation data will be crucial in shaping market sentiments and movements.
Technical analysis provides insights into probable market scenarios, emphasizing the unpredictability of market reactions.
Final Thoughts:
As financial markets remain unpredictable, it’s essential to stay informed and cautious. The quote “The market can remain irrational longer than you can remain solvent” highlights the need for prudence and strategic decision-making in investments.
Ali Merchant, a seasoned financial market professional, offers valuable insights and training through TwT Learnings. Stay updated with us on X.
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