CPI RELEASE AT 8:30
What we're looking for
CPI Release
CPI releases at 8:30 this morning and the number will move the market.
Here’s the numbers to watch:
Previous: 0.3%
Consensus: 0.3%
Therefore, we are looking for a number below 0.3% - this would be good for the market. Anything 0.3% and above would likely trigger a sell off.
Probabilities
JP Morgan released their probabilities for CPI and the anticipated market reaction (see below).
As you can see, they are leaning hawkish, as they believe that if CPI comes in line with consensus, SPX will drop.
They do place a 45% chance that CPI comes in between 0.2% and 0.3% and SPX would gain 50-75 basis points.
What do We Know?
One back of the envelope way to understand where CPI might be is to understand how crude oil and gasoline have acted over the past month.
This typically is correlated with the CPI number.
Looking at the image above, you can see that crude oil has dropped 5.4% over the past month, which is a good sign.
However we will have to see if that is far enough down to lead to a strong CPI number.
For more information on what to watch for with CPI number, watch the short clip below: