The ranges of estimates 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.

CPI M/M

  • 0.5% (1%)
  • 0.4% (6%)
  • 0.3% (64%) - consensus
  • 0.2% (28%)
  • 0.1% (1%)

Core CPI M/M

  • 0.3% (31%)
  • 0.2% (66%) - consensus
  • 0.1% (3%)

We won't get the Y/Y figures today because of the government shutdown last year. The focus will be on the Core CPI M/M measure where we can see that the expectations are skewed to the upside.

Fed's Waller delivered some very hawkish comments today where he said that he would support a quarter-point rate hike in December even if October's CPI improves relative to September. Therefore, a soft report is not going to change much.

What traders will be looking at is if the Core CPI M/M comes in at 0.3% or higher as Waller said that he would vote for a larger 0.5% hike in such a case. He's a very influential Fed governor and has been a leading indicator for Fed policy since 2021, so his views are always important for the market.

Source: ForexLive / investingLive — original article