Why it's important?
In the Asian session, Eamonn published the range of estimates for today's US CPI report. These ranges are important in terms of market reaction because when the actual data deviates from the expectations, it creates a surprise effect. Another important input in market's reaction is the distribution of forecasts.
In fact, although we can have a range of estimates, most forecasts might be clustered on the upper bound of the range, so even if the data comes out inside the range of estimates but on the lower bound of the range, it can still create a surprise effect.
Distribution of forecasts
CPI Y/Y
- 3.1% (2.3%)
- 3.0% (66.0%)
- 2.9% (31.7%)
CPI M/M
- 0.3% (10.0%)
- 0.2% (77.1%)
- 0.1% (12.9%)
Core CPI Y/Y
- 3.3% (31.8%)
- 3.2% (64.0%)
- 3.1% (4.2%)
Core CPI M/M
- 0.3% (2.9%)
- 0.2% (87.1%)
- 0.1% (7.4%)
- 0.0% (2.6%)
We can see that for the headline figures the forecasts are clustered around the bottom of the range of estimates, while for the core figures they are clustered around the upper bound of the range. This suggests that a miss on the core figures will have a much bigger impact than a beat.
