Analysis: November CPI Report May Just Be a 'Sideshow,' with a Very High Market-Impact Threshold

December 17 — For most of the past three years, the monthly Consumer Price Index (CPI) report has been a top data point U.S. stock traders watched closely. Now, investors aren’t on edge—instead, they’re waiting for Thursday’s November inflation data release with a sense of detachment. Options traders are betting the S&P 500 will move less than 0.7% daily—well below the 1% average actual volatility seen in the 12 CPI reports through September this year. The shift in market sentiment makes sense. The Fed has lately focused more on labor market weakness signals than minor inflation fluctuations. Tuesday’s data showed the job market’s still sluggish, leaving room for rate cuts next year. “The market’s priced in that this data is either irrelevant, or its quality is questionable from a data collection standpoint—so it won’t get overly scrutinized,” said Alexander Altmann, Barclays’ Global Equity Tactical Strategy Director. The report also won’t likely change the outcome of the Fed’s January policy meeting. Another reason CPI matters less now: Fed Chair Powell’s term ends in May next year. His successor is expected to back big rate cuts to meet President Trump’s unconventional calls for aggressive easing—no matter the data.