Trading the CPI Report: What You Need to Know
In a Nutshell
CPI report releases tomorrow at 8:30 AM ET with headline expected to rise from 3.4% to 3.6% and core from 2.4% to 2.5%—any deviation from these expectations will trigger immediate market reaction. The Fed's next rate decision is in two weeks, currently priced at 77% probability of holding rates steady. New traders should stay out of the market entirely on release day due to extreme volatility, as technical analysis loses all value once fundamentals hit.
These notes were generated by AI and may contain inaccuracies.
CPI data report will be released tomorrow, one hour before the market opens. The Nasdaq QQQ ETF is currently trading slightly lower, losing 0.33%, falling from a high of 762 to a low of 740. This represents a decline of about 3.11% from highest to lowest overall. Toward the close of the market, the market began to turn around.
CPI measures inflation at the consumer level. There are two key components: overall CPI, which includes all products, and core CPI, which includes all products except food and energy. The Federal Reserve pays more attention to core CPI because they can control these factors, while food and oil prices depend on external factors beyond their control.
The CPI report will be published at 8:30 AM Eastern Time, which is 5:30 AM Arizona time. Market expectations show core CPI is expected to increase to 2.5 from the current rate of 2.4, representing an expected increase that has already been priced into the market. If the actual number exceeds 2.5, the situation becomes more significant.
Exactly two weeks from tomorrow, the Federal Reserve is scheduled to make a decision on interest rates. The current probability of the Federal Reserve taking a break is 77%. There has been a significant change in this probability. Recent PCE and labor market reports showed a weak labor market and PCE report lower than expected. The main goal of the Federal Reserve is to create a strong labor market while maintaining good price stability, with an inflation target of 2%.
If inflation continues to rise to 3.4-3.6, it would be against the 2% target and contrary to the Federal Reserve's mandate. If the report shows 3.6, 3.7, or 3.8, the chances of the Federal Reserve raising interest rates at the next meeting will greatly increase. This is a feasibility study tool that will continue to change as new information becomes available, and the market will react accordingly.
Tomorrow is going to be a very unstable day. New traders are advised to just observe. Many experienced traders do not trade on days like tomorrow because the day can be very volatile. The speaker notes that some people have this method, though it's not mandatory advice. After the release of this report, days or hours will pass before the situation stabilizes somewhat and the direction becomes clear. When fundamentals start to take effect, technical analysis has no value.
The official website for the CPI report is bls.gov/cpi. This is a website that should be saved for continued trading and investing because it is a monthly report and one of the most influential monthly reports. This is a very important time for the Federal Reserve to examine the current inflation rate.
As soon as the report is published, click on the PDF. It may need to be refreshed a few times, and the publication date should be verified as updated and calculated. The September report calculated the month of August. Tomorrow's October publication will count for September because the month must be completely finished to report.
Headline inflation is supposed to go from 3.4 to 3.6, representing a 0.6% increase. The report will show growth of 0.4%, 0.5%, or 0.6%. Energy is the biggest contributing factor to the rising inflation rate. The calculation includes food, eating at home, eating out, energy, fuel products, gasoline, and fuel oil. Core inflation covers products other than food and energy, including new vehicles, used cars and trucks, clothing, medical services, shelter, transportation services, and medical services.
The calculation process compares items month-to-month, determining if energy increased or decreased from August to September and by how much. All items that have increased or decreased are summed to determine the inflation rate for that month. Headline inflation is expected to increase by 0.6%, but this calculation uses the last 12 months before seasonal adjustment.
The calculation adds the new September figures while removing the previous September, which was a 0.3% increase. This takes seasonal adjustments into account. The formula calculates the last 12 months, adding the new month of September and subtracting the old month. Core CPI accounts for all products except food and energy, with core inflation likely to increase from 2.4 to 2.5 percent.
If any listed products show numbers lower or higher than market expectations—whether headline inflation rate, core inflation, monthly core inflation, or headline inflation—the market will react because it wasn't factored in beforehand. There is no reason to assume there is a chance to wait and react.
The live stream will begin 5 to 10 minutes before the report is released to observe market reaction and determine next steps. Live trading session membership costs $1.30 per day. The October offer provides one-time payment for lifetime access with $2.25 off, equaling $1.30 per day. The program is designed for complete beginners, with access to recent live sessions at market open for 30 minutes to an hour, plus the LPB lesson library.
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