The US inflation data is due at 1230 GMT (8.30am New York time):
This snapshot from the ForexLive economic data calendar, access it here.
- The times in the left-most column are GMT.
- The numbers in the right-most column are the 'prior' (previous month) result. The number in the column next to that, where is a number, is the consensus median expected.
I stuck an arrow next to the m/m core CPI, this the one that gets the most attention. Out there in the public of course it's the headline rate that is the most important, and some of the previews I have seen have forecast a scarily high rate expected.
The via Scotia, expecting headline at 1.2% m/m and core at 0.8% m/m, both above the consensus (see picture above)
- I’ve gone with 1.2% m/m for seasonally adjusted headline inflation and 8.9% y/y while expecting core inflation to hold steady at 6% y/y only because another large month-over-month gain of 0.8% should be enough to offset year-ago base effects that would otherwise put downward pressure on the year-over-year rate.
- If I’m right, then headline CPI will be running at a nearly 14% m/m rate in seasonally adjusted and annualized terms, with core CPI inflation running at 10% m/m at a seasonally adjusted and annualized rate. That would be the hottest core reading since June of last year while indicating continued upward pressure upon underlying inflation
Scotia adds, in brief, some of the drivers include:
- Gasoline prices moved higher again
- Natural gas prices moved higher
- Used vehicle prices moved up
- New vehicle prices were slightly higher but not enough to matter in weighted terms.
- I’ve assumed another 1% rise in food prices
- I’ve assumed that reengagement effects particularly through high-contact service prices like airfare, lodging, car rentals, etc contribute to an extra three-tenths rise in inflationary pressures from a bottom-up standpoint.
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The higher headline and core come in the more pressure the Fed will face to hike faster and harder. FOMC hikes are contributing to USD strength, of course.
