14.7 C
London
Tuesday, October 3, 2023
HomeChance of A Bigger Fed Move Next Month, Now 26%, Hinges on...
Array

Chance of A Bigger Fed Move Next Month, Now 26%, Hinges on CPI

Date:

Related stories

Pentagon Warns “Months Left” In Arms Supply For Ukraine As Biden To Reassure Allies In Phone Call

Pentagon Warns "Months Left" In Arms Supply For Ukraine As Biden To Reassure Allies In Phone Call President Joe Biden is planning to hold phone calls with allies possibly as early as Tuesday, with an aim of reassuring them his administrati...

Researchers Find World’s Oldest Time Capsule From 1726 In Bulb Of Church Spire – Here’s What’s Inside

Researchers Find World's Oldest Time Capsule From 1726 In Bulb Of Church Spire - Here's What's Inside Authored by Michael Wing via The Epoch Times (emphasis ours), Almost 300 years ago, someone implanted what now might be the world's olde...

EU Will Stretch From Lisbon To Luhansk – German FM Declares From Ukraine’s Capital

EU Will Stretch From Lisbon To Luhansk - German FM Declares From Ukraine's Capital On Monday German Foreign Minister Annalena Baerbock issued an ultra-provocative statement which Moscow is sure to take as "fighting words". What's more is t...

Putin Orders First-Ever Nationwide Nuclear Drill, Prepares Bomb-Test At Arctic Circle

Putin Orders First-Ever Nationwide Nuclear Drill, Prepares Bomb-Test At Arctic Circle Via Remix News, Russia will hold its first nationwide drill simulating widespread nuclear strikes on the country, daily Magyar Hírlap writes. The one...

Consumer price index. Switzerland, 08:30 (GMT+2)

At 08:30 (GMT+2), September data on the consumer price index will be presented in Switzerland. It is the main indicator of inflation in the country and reflects changes in retail prices for a certain “basket” of goods and services: food, transport, uti...
Chance of A Bigger Fed Move Next Month, Now 26%, Hinges on CPI

By Ven Ram, Bloomberg markets live reporter and analyst

There is little to over-egg the importance of the US inflation reading for December that we will get today. The markets have been relatively quiet ahead of the release, which isn’t a surprise given it will be the last the Federal Reserve gets to see before it reviews rates next month.

While there is rather a wide scatter of forecasts, pretty much everyone and their crystal ball seem to agree that we will get annual inflation declining below 7% for the first time in more than a year — a pretty significant milestone in itself if it proves to be accurate. Recent moves suggest that positioning heading into the data is bullish Treasuries as well as stocks but bearish the dollar, which of course raises the prospect of “sell on news.”

Consistent with that speculation, interest-rate traders are factoring in only a 26% chance of a move larger than 25 basis points when the Fed meets on Feb. 1. The nub, though, shouldn’t be lost on the markets: unless today’s print is persuasively mild, the Fed has every reason to perhaps gravitate toward a larger hike if only to get its rate to more restrictive levels sooner and then pause rather than drag its feet and get in smaller steps to its intended destination. (A 6.5% print consistent with the median forecast is still way too high from the Fed’s perspective, though it would welcome the direction of travel.)

And with 17 of 19 participants having indicated their preference for a Fed funds rate above 5%, getting there sooner will make the prospect of a soft landing more viable than would be the case otherwise. While Fed St. Louis President James Bullard isn’t a voting member this year, one would think that his advocacy of front-loading the increases would still be a persuasive refrain for the rest on the committee. A bigger move would also keep those all-important inflation expectations under check — and the Fed has an impressive speaker line-up after the CPI print to drive home its message.

Whatever your persuasion on the margin of increase, the markets will be holding their collective breath early in the New York day.

Tyler Durden Thu, 01/12/2023 - 08:02

Subscribe

- Never miss a story with notifications

- Gain full access to our premium content

- Browse free from up to 5 devices at once

Latest stories

LEAVE A REPLY

Please enter your comment!
Please enter your name here