Today is the US CPI Day. Everyone's waiting for the release so nothing else will matter today. After the CPI release, we will hear from a couple of Fed speakers, including NY Fed President Williams, so that's going to be something to keep a close eye on.
12:30 GMT/08:30 ET - US September CPI
The US CPI Y/Y is expected at 2.3% vs. 2.5% prior, while the M/M figure is seen at 0.1% vs. 0.2% prior. The Core CPI Y/Y is expected at 3.2% vs. 3.2% prior, while the M/M reading is seen at 0.2% vs. 0.3% prior.
The last US labour market report came out much better than expected and the market’s pricing for a 50 bps cut in November evaporated quickly. The market is now finally in line with the Fed’s projection of 50 bps of easing by year-end.
Fed’s Waller mentioned that they could go faster on rate cuts if the labour market data worsened, or if the inflation data continued to come in softer than everybody expected. He also added that a fresh pickup in inflation could also cause the Fed to pause its cutting.
Yesterday, we got to know from the FOMC Meeting Minutes that Fed Chair Powell basically pushed the committee to go for a 50 bps cut in September.
Given the recent NFP report and the Minutes, even if the CPI misses, the Fed won't consider a 50 bps cut in November anyway despite Fed's Waller comments. That could be a debate for the December meeting (doubt though) if inflation data continues to come below expectations.
On the other hand, a hot report will likely keep a 25 bps cut in November on the table, but we could see the market pricing in a pause in December or even less rate cuts for 2025.
12:30 GMT/08:30 ET - US Jobless Claims
The US Jobless Claims continues to be one of the most important releases to follow every week as it’s a timelier indicator on the state of the labour market.
Initial Claims remain inside the 200K-260K range created since 2022, while Continuing Claims after rising sustainably during the summer improved considerably in the last weeks.
This week Initial Claims are expected at 230K vs. 225K prior, while Continuing Claims are seen at 1830K vs. 1826K prior. This time around, all eyes will be on the US CPI report, so nobody is going to care about claims unless we get huge deviations from the expected numbers.
Central bank speakers:
- 07:45 GMT - RBA's Hunter
- 13:15 GMT/09:15 ET - Fed's Cook (dove - voter)
- 14:30 GMT/10:30 ET - Fed's Barkin (neutral - voter)
- 15:00 GMT/11:00 ET - Fed's Williams (neutral - voter)
- 15:30 GMT/11:30 ET - SNB's Martin
