UPDATE: The US Consumer Price Index (CPI) report has just been released, overshadowing key decisions from the Bank of England and the European Central Bank today. This unusual release comes amid the ongoing implications of the recent government shutdown, which has created a gap in the data reported by the Bureau of Labor Statistics (BLS).
Today’s CPI report, dated November 2023, will not include the full details for October due to data collection challenges during the shutdown. According to officials, just over 20% of the price data in the CPI basket is collected online or through private data providers, allowing for some insights even in the absence of in-person collection.
Market analysts are closely watching how the BLS formats this report. While there may be a focus on year-on-year numbers, it remains unclear if month-on-month figures will be reported.
“Because of the shutdown, the individual months will not be reported, just a price level for November,”
stated analysts from Morgan Stanley.
As traders digest this information, there is a growing concern about the implications for inflation trends. Core goods inflation is expected to rise slightly as tariffs continue affecting the economy, but seasonal factors, such as Black Friday discounts, could introduce a downward bias to November’s price figures.
The immediate relevance of the CPI report cannot be overstated. Traders are likely to react more strongly to today’s inflation data than to the anticipated policy decisions from the BOE, which is expected to announce a rate cut, and the ECB, which is not expected to make any changes.
As market players brace for volatility, the key takeaway from the CPI report may indicate a light moderation in price pressures. However, barring any major surprises in the data, reactions might remain tempered due to the data quality issues surrounding October’s figures.
Looking ahead, traders should be cautious about overreacting to these numbers, especially with the next Federal Reserve rate cut not priced in until June next year. With uncertainty lingering over the reliability of today’s report, a measured response is likely as market participants seek to navigate the implications of this critical economic indicator.
Stay tuned for further updates as this story develops, and prepare for a potentially volatile trading day ahead.
