Written before the release of tonight's CPI data
Tonight, the U.S. CPI data for October will be released, but this time it is different from previous occasions. In October last year, the U.S. government was shut down, leading to the non-publication of most CPI indexes. The annual rate of CPI needs to be compared using this year's October index against last year's October index, and since last year's base is missing, there will not be any year-on-year data for October 2026 CPI and core CPI this time.
Therefore, the market will mainly focus on the month-on-month rate tonight, which is currently expected to be 0.3% for October CPI and 0.2% for core CPI. The previous values were 0.6% and 0.3%, and from the data perspective, the market seems quite optimistic, believing that the monthly rate for October will be lower than the previous value, and significantly so.
I also looked at the data from the Cleveland Federal Reserve, which indicated a month-on-month rate of 0.24% and a core month-on-month rate of 0.21%; the Cleveland Federal Reserve's data feels more aggressive.
From my personal perspective, without the annual rate, the market's sensitivity to the monthly rate will actually be higher. If the October CPI month-on-month rate is significantly higher than 0.3%, it basically indicates that energy prices are still being transmitted into inflation, and the expectation for a rate hike in December will likely increase.
If the month-on-month rate can decrease, especially if the core CPI can stay around 0.2%, which is less than or equal to expectations, then it will be a good boost for the risk market.
To put it simply, if this time the CPI month-on-month rate and core month-on-month rate are less than or equal to expectations, it is a positive sign; if they are greater than expectations but less than previous values, it is slightly negative; and if they are greater than expectations and also greater than previous values, then it is completely negative.
It is important to note that the December monetary policy meeting is on December 10, and by that time, the November data will not have been released except for non-farm data, so the October data might be the largest influencing factor on the Federal Reserve's monetary policy.
A @Gate, trading more markets
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