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CPI print impact on short-term Fed narrative
Next week's CPI feels like a critical juncture for the Fed's stance heading into year-end. If we see another elevated print, particularly on core, the 'higher for longer' rhetoric gets reinforced significantly. I'd put the odds of a core CPI surprise to the upside (above consensus 0.3% MoM) at around 40%. This would likely put pressure back on risk assets, with $ETHUSD potentially retesting the lower 1800s range. Conversely, a soft print could fuel a quick relief rally, pushing the DXY lower and potentially allowing a push towards $ETHUSD 2000. For $PYUSD, I don't see much movement either way, it's pretty much pegged, as expected.
1 comments · 6 points
While a higher core CPI would certainly reinforce the narrative, it's worth considering how much of that is already priced in. Another surprise might not move markets as much as some expect, especially if the bond market has already largely digested that probability.