$ qubo learn macro/02

Inflation: CPI, PCE and why markets care

Inflation is the pace at which prices rise. In the US, the two main measures are the CPI (Consumer Price Index), published monthly by the Bureau of Labor Statistics, and the PCE price index, the measure the Fed targets.

Each report has a headline figure and a core figure. Core inflation excludes food and energy, which swing a lot, to show the underlying trend. Markets often react more to core than to headline.

Inflation matters for markets because it shapes central bank decisions. Inflation above target makes rate cuts less likely; inflation falling toward target makes them more likely.

As with rates, the reaction depends on the gap between the figure and the consensus forecast. A CPI print 0.1 point above consensus can move bonds, the dollar and crypto within minutes of the release.

// rule to remember

// your turn

In the Calendar, open the last CPI release and compare the actual figure with the forecast. Was it a surprise?

Educational content only. Not investment advice. Past data does not predict future results. Risk disclosure