What are the stakes for Thursday's US CPI report?

<p>The highlight of the week on the US economic calendar is Thursday's consumer price index report.</p><p>Importantly, this report is the anniversary of the September 2022 CPI report and that one marked the bottom of the Nasdaq. On that day, the US reported a hotter CPI report but the market concluded that the peak was near.</p><p>Ultimately, that proved to be the case as September 2022 core CPI at 6.6% marked the top on the way to 4.3% in August and an expected reading of 4.1% on Thursday.</p><p>Headline CPI had peaked in June on the oil price spike but had remained stubbornly high through September before a quickening drop. Notice the recent bounce though, which is also energy related. The consensus for Thursday's report is a dip to 3.6% but if current oil prices hold, that will fall further next month.</p><p>The bigger question is: Does the market even care?</p><p>If you look at bond market pricing, it's something of a foregone conclusion that inflation will return to target. The market has priced in that the Fed will remain at peak rates for some time and the recent rise in long-dated yields will slow borrowing and activity further.</p><p>Wednesday's PPI report might have been a sign of how trading will go. It proved to be hotter than the consensus but after a 20-pip kneejerk reaction higher in the dollar, it quickly reversed and fell to the lows of the day. Unlike last October, when there was a 7% swing in the Nasdaq on the report, there just isn't the fear about inflation and Fed rates that there was a year ago.</p>

This article was written by Adam Button at www.forexlive.com.