Wall Street economists polled by FactSet expect Wednesday morning's September consumer price index to show prices up 3.6% from a year earlier, a step above August's 3.4% gain.
Earnings season also ramps up this week, with four Club holdings set to report and two main inflation reports landing alongside them. Core inflation, which strips out food and energy, is expected to rise 2.4%, the same as in August. The Fed's 2% target has stayed out of reach for years.
The Fed raised rates last month for the first time in three years. The CME FedWatch tool puts the odds of a hold in October above 80%, though the market still favors one more hike at the December meeting. Fed Chairman Kevin Warsh has made clear he cares most about the inflation half of the central bank's mandate. The labor market has stayed resilient, even with a wobble in September payroll growth.
Investors who pick individual stocks usually lean harder on what executives say in post-release conference calls than on monthly data. Right now, elevated oil prices and higher bond yields are driving the bus, so the inflation numbers carry extra weight. They could shift expectations for the Fed's two-day policy meeting later this month and move markets.
A reading that merely matches forecasts is the least the bond market and the rate hawks need to see.
Common questions
What is the September inflation report expected to show?
- Economists polled by FactSet expect the September consumer price index to show prices up 3.6% from a year earlier, a step above August's 3.4% gain. The report lands Wednesday morning. Core inflation, which strips out food and energy, is expected to rise 2.4%, the same as in August.
Will the Fed raise interest rates in October?
- Probably not. The CME FedWatch tool puts the odds of a hold in October above 80%. The market still favors one more hike at the December meeting. The Fed raised rates last month for the first time in three years, and Chairman Kevin Warsh has made clear he cares most about inflation.
Is inflation still above the Fed's 2% target?
- Yes. The Fed's 2% target has stayed out of reach for years. Economists expect September prices to be up 3.6% from a year earlier, and core inflation, which strips out food and energy, to rise 2.4%. Fed Chairman Kevin Warsh has made clear he cares most about inflation.
