CPI Preview: Disinflation Stalling, Health Insurance Spiking And Goldman's Market Matrix

Ahead of the October CPI print, the market expects a 0.3% MoM increase in October core CPI corresponding to a year-over-year rate of 4.1%, unchanged from the previous month. Consensus also expects a 0.1% MoM increase in October headline CPI which corresponds to a year-over-year rate of 3.3%, down from 3.7% in September. This would also translate into a roughly 0.3% increase in core services excluding rent and owners’ equivalent rent.

As a result of the flatlining core CPI, the October inflation report will likely reinforce the Fed’s tightening bias, even as policymakers have held rates steady at the past two FOMC meetings, because as Bloomberg notes "after showing encouraging progress this summer, disinflation in year-over-year core CPI likely stalled, while the monthly pace has been creeping up toward something more consistent with an annualized inflation pace of 3%-4% than 2%. It’s clear inflation is still a long way from the Fed’s 2% target."