Is inflation beaten or only temporarily suppressed? Markets are already worried about Trump's tariffs, and a potentially hot inflation report may add to fears.
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CPI inflation comes after a market hangover
The decisive nature of the US elections sent markets rallying – but that was a week ago. President-elect Donald Trump seems even more severe with his tariff policy after nominating several China hawks to key positions.
Tariffs mean higher prices on imported goods – a bump up in inflation, and eventually a more elevated path of interest rates.
Is inflation already on the rise? The Consumer Price Index (CPI) report for October will shed some light on recent developments. The CPI already showed a minor acceleration in price rises in September, a move that was dismissed as a one-off. Another upside move would cause more worries.
Core CPI MoM is the most important figure for markets and the Federal Reserve (Fed). The economic calendar points to an increase of 0.3% in October, repeating last month's rise.
Meeting these expectations or beating them would buoy the US Dollar, while further weighing on Gold and Stocks.
A 0.2% outcome or lower would trigger profit-taking in the Greenback, while shoring up the precious metal and equities.
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