CPI Preview: The Number Suddenly Matters A Lot

Up until last week's jobs report, virtually nobody expected tomorrow's CPI print to be even remotely interesting or market-moving: after all, the Fed has made it very clear that in their mind at least, inflation has been defeated when the Fed will launched the latest easing cycle with a jumbo cut last month, one which it expects to follow with at least two more regular cuts by year end. But then something unexpected happened: the jobs print came in beyond red hot  - and well above the highest economist estimate - with the unemployment rate unexpectedly sliding to 4.1% (although as we showed, the unemp rate would have been 4.5% had the BLS not "calculated" that a record 785K government workers were added to payrolls in September).

The cherry on top was that both hourly and weekly wages came in hotter than expected, suggesting that far from beaten, wage inflation had been at best dormant and was about to make a second run for it.