Forecasts suggest the key annual inflation rate will fall to 3.1% last month, down from 3.2% in October, and core annual inflation is also expected to remain flat at 4.0% levels in November.
What can we expect from the market reaction?
Traders have priced in the first Fed rate cut in May next year, and there are expectations that there are nearly 111 basis point rate cuts currently priced in for the whole of 2024.
If we see inflation numbers below expectations that should boost the above rates, and that could also boost the rounding of the May to March date, and we don't think we would see the Fed managing such a situation.
And as such if we see today's inflation report leaning into the opposite reaction, and inflation has risen more than expectations, expect more returns in the above figures similar to what we saw after Friday's U.S. jobs report. The Past
Overall, the moves may not be so impactful as markets will have to wait for the Fed tomorrow, it is the most important event for the dollar and risk sentiment this week.
