Tonight, the US September unadjusted CPI data is about to be released.
This wave of data can basically be confirmed to trigger a significant market movement.
The most concerning question for everyone is: this time, is it good news or bad news?
Don't rush to conclusions; first, clarify two key concepts, which are actually not difficult at all.
Ordinary CPI is what we commonly refer to as the "price index," which includes daily expenses like food, gasoline, and rent.
Core CPI, on the other hand, is a bit "cleaner," excluding items with large price fluctuations, such as food and energy, and can more accurately reflect long-term price trends.
So how do we determine if it's good news or bad news?
In a nutshell—look at whether the actual data is higher or lower than expected.
Whether it's ordinary CPI or core CPI,
as long as the data is below expectations, the market tends to interpret it as good news;
on the contrary, if it is above expectations, then it's bad news.
If it’s about the same as expected, the market impact usually won't be too significant.
Some might ask:
"So if ordinary CPI is low and core CPI is high, whose opinion should we listen to?"
The focus is on—core CPI is more important.
Because it can reflect the true inflation pressure and has a greater impact on the central bank's policy decisions.
So in this "one good and one bad" situation, we should prioritize the direction of core CPI.
If core CPI is higher than expected, the overall outlook is bearish;
if lower than expected, then it’s bullish.
Tonight's market will key in on the comparison between core CPI and market expectations.
In simple terms:
If it's lower than expected, the market is optimistic; if it's higher than expected, the market is cautious.
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