- CPI estimate +6.5% y/y
- Prior +7.1%
- Core CPI estimate +5.7% y/y
- Prior +6.0%
We're finally at Thursday and this is what markets have been eyeing all through the start of the year so far. US inflation has eased in recent months and that is breeding market optimism that the Fed may not have to be too aggressive in the final leg of its tightening cycle, as price pressures start to show signs of peaking.
The estimates coming into today's report will continue to highlight falling price pressures, even if the monthly readings are estimated to go up slightly. For broader markets though, it will be all about the annual readings as just about anything that signals softer inflation will be a welcome development at this point.
Equities are keeping some optimism so far this week but any further upside breakout will require vindication from the inflation numbers later today. Meanwhile, the dollar is on edge and this could very well set off the next downside leg for the greenback as well.
As we await the data release, expect things to be more pensive and quiet in Europe once again - as has been the case for much of this week.
