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 Y/Y
- 3.1% (2%)
- 3.0% (12%)
- 2.9% (73%) - consensus
- 2.8% (10%)
- 2.7% (3%)
CPI M/M
- 0.5% (3%)
- 0.4% (27%)
- 0.3% (67%) - consensus
- 0.2% (3%)
Core CPI Y/Y
- 3.2% (2%)
- 3.1% (86%) - consensus
- 3.0% (12%)
Core CPI M/M
- 0.4% (13%)
- 0.3% (84%) - consensus
- 0.2% (3%)
As always, the focus will be on the Core figures. We can notice that we have a strong consensus for 3.1% for the Core Y/Y and the 0.3% for the Core M/M. Therefore, the biggest moves will likely be triggered by deviations from these figures as that would be in the very low consensus.
A soft report will likely raise the probabilities for a 50 bps cut to around 40-60% and then WSJ's Timiraos could "leak" again before Wednesday by how much the Fed is likely to cut.
On the other hand, a hot report won't change anything regarding the 25 bps September cut but could trigger a slightly hawkish repricing for the 2026 pricing (3 rate cuts expected at the moment).
Note also that we will get the US jobless claims figures at the same time, which could steal the show in case we get big deviations in the data.
