Baxia Markets
June 10, 2021

All Eyes On US CPI Releases

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Here is one thing you need to know before the opening bell today, June 10th. Today we see both US CPI and Core CPI releases. Set your alarms because this is important. 


12:30PM (GMT) - CPI m/m

12:30PM (GMT) - Core CPI m/m


What is it? 


The Consumer Price Index is released by the US Bureau of Labor Statistics and is a measure of price movements by the comparison between the retail prices of a representative shopping basket of goods and services. Essentially it attempts to quantify the aggregate price level in an economy and measure the purchasing power of a country's unit of currency. The CPI is a key indicator to measure inflation and changes in purchasing trends. 


On the other hand, we have Core CPI. In basic terms, while Core CPI (Consumer Price Index) and regular CPI are nearly identical, it is important to note that Core CPI excludes food and energy. One factor that makes Core CPI an important statistic is that it looks at price change from the consumers perspective. It is a crucial way to measure changes in inflation and purchasing trends. The m/m means month to month. 



What are the Expectations for the USD - CPI m/m & Core CPI m/m?


With this release right around the corner, we take a look at what the expectations are for this release and what it means. The expected figure for CPI is 0.4% compared to the previous figure of 0.8%. The expected figure for Core CPI is 0.5% compared to the previous figure of 0.9% 



Professional Insight


"There should be a dramatic pause here. Because no one knows," said Jim Wood-Smith at Hawksmoor Investment Management, adding “few market or investment professionals now working have seen anything other than falling inflation expectations for much of the past 4 decades.”


Now that you have read that statement, you should be able to understand the magnitude of this release event. Are we about to enter an inflation rollercoaster? Is the Fed really in control of what is happening? According to Jim Wood-Smith at Hawksmoor Investment Management, very few people in the market have experienced rising inflation. 



What happens if...


We see a higher number than 0.4% and 0.5% respectively? That is typically a good sign for the US Dollar. However, if the number is way higher than expected, then there could be negative implications. 


What happens if...


We see a lower number than 0.4% and 0.5% respectively? That is typically not a good sign for the US Dollar. We also do not want to see a number that is way lower than 0.4% and 0.5%, especially not in the negatives as we all know deflation is not ideal in the long term. 



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