loader image

(US) CPI DATA INCOMING

Week Ahead: (US) Inflation data to the fore

We finally get some US data this week (!) in the form of important inflation figures, which will dictate price action amid several other market drivers which have been seen recently. The big one has been tariffs, the trade war and rising tensions between the US and China which are bubbling, with the leaders of the two biggest world economies still set to meet in a few weeks. Investors believe the 100% levy threat is exactly that, with TACO still in play due to the fact that economists reckon the average US tariff rate would jump to above 30% if President Trump followed through.

Obviously, this is unsustainable and would be greater than even the Liberation Day tariffs originally announced in April. That said, we still saw stocks fall sharply, while yields and the dollar slid too as markets baked in more concrete policy easing, with even the small chance of a bumper 50bps rate cut at one of the two remaining FOMC meetings this year. Credit concerns around regional US banks also linger, but it’s notable that stocks closed last week in the green. Focus will turn to Tesla’s earnings published after the US close on Wednesday, among the 86 S&P 500 firms listed to release results this week. Those from Netflix, GM, GE, Ford and Intel will also grab headlines.

The dollar did soften on the week, and a 0.3% m/m core US CPI print for a third consecutive month shouldn’t see much change in this picture, though risks are skewed to the upside. That said, the bar for Fed skipping its planned rate cut on 29 October is very high. US PMI data could also catch more attention than usual owing to the lack of data in recent weeks. US economic releases will probably continue to be scarce, with prediction markets assigning roughly an 80% probability that the shutdown will extend into November.

Accessibility Toolbar

Scroll to Top