CPI Tomorrow + Futures Trading Levels for Oct. 12th
Posted By:- Ilan Levy-Mayer Vice President, Cannon Trading Futures Blog
What you need to know for the last two trading days of the week
By Mark O’Brien, Senior Broker
This morning the Labor Department released data on U.S. producer prices. It showed a higher-than-expected 0.5% uptick in food and energy prices at the wholesale level. The so-called core Producer Price Index – a narrower measure that excludes food, energy and trade services – showed a 0.2% increase, which matched forecasts. Looking at the big picture, the report suggests inflation remains stubborn and the Fed will remain vigilant in it continued efforts to check the U.S. economy with care and reduce inflation.
Markets look at the PPI as a leading indicator for inflation, as it gauges a wide variety of costs for pipeline goods that feed to consumer products.
In recent days, central bank officials have indicated that they may not need to enact additional hikes as Treasury yields have risen sharply on their own, tightening financial conditions. That in turn has helped assuage market fears, leading stocks higher this week.
Tomorrow, The Bureau of Labor Statistics will release its more closely watched Consumer Price Index (CPI) report, which measures the prices paid by consumers for a basket of consumer goods and services.
Trading off its near one-year lows below $1,825/ounce on Friday, Dec. Gold has raced up ±$70/ounce as the crisis in Israel / Gaza / Lebanon has intensified. This commodity futures contract will likely show to be more sensitive to the turn of events in the region than any other.
Along the same lines, from a from a commodity price influencing perspective, the fighting in Israel / Gaza / Lebanon should have a limited impact on most commodities. Any sensitivity reactions in the markets will presumably be seen in indexes (seemingly sensitive to anything), energies and some currencies. Any signs the conflict escalates to involve other notable / regional state / non-state actors, traders should anticipate increased volatility in these market sectors and approach your trading appropriately.
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