Quick Take: Jobless Claims More Important Than CPI

From a Fed perspective, the CPI is not this week’s most important release. This is because the CPI is unlikely to be much different from the consensus 0.2% MoM for core (see Sam’s model). More importantly, CPI and PPI are unlikely to yield a core PCE print estimate much different from the 0.2% MoM the Fed needs in order to hit the SEP forecast of 2.8% average Q4/Q4 2024 inflation.

As Fed Chair Jerome Powell said at Jackson Hole, inflation risks are down, employment risks are up. From this perspective, the most important data of the week are jobless claims, which have been falling (Chart 1). The consensus sees initial claims unchanged and continuing claims somewhat higher, which is consistent with my expectations of a 25bp cut next week. But even if the consensus is wrong, it is unlikely to be wrong by a wide margin and sway the Fed. 

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Dominique Dwor-Frecaut is a macro strategist based in Southern California. She has worked on EM and DMs at hedge funds, on the sell side, the NY Fed , the IMF and the World Bank. She publishes the blog Macro Sis that discusses the drivers of macro returns.

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(The commentary contained in the above article does not constitute an offer or a solicitation, or a recommendation to implement or liquidate an investment or to carry out any other transaction. It should not be used as a basis for any investment decision or other decision. Any investment decision should be based on appropriate professional advice specific to your needs.)