The US labour market is strong, as evidenced by the upside surprise in the NFP last week:
Eyes now turn to inflation with:
- September PPI due on Wednesday at 8.30am US Eastern time
- September CPI due on Thursday at 8.30am US Eastern time
There are also less direct indications due from:
- The September inflation expectations in the Atlanta Fed’s business inflation expectation report at 1000 US Eastern time on Wednesday
- The University of Michigan survey of consumers at 1000 US Eastern time on Friday.
Inflation data will shape the outlook for Federal Open Market Committee (FOMC) monetary policy:
- the recent move higher for energy costs are likely to have spilled into underlying inflation, but on the other hand other inflationary pressures may be easing.
- more evidence about the lagged effects of past rate hikes should be evident also
In-line or lower inflation figures will support the FOMC extending its pause in rate hikes after the October 31-November 1 meeting. And, of course, higher could see another hike this year, especially given the resiliency of the jobs market.
I'll be back tomorrow with a preview of the PPI, and then Thursday for the CPI.
