SPTS - Why U.S. CPI Revisions Could Be A Big Deal (Or Mean Nothing At All)

2024-02-08 05:20:00 ET

Summary

• Last year's update of CPI seasonal adjustment factors was a big deal, showing inflation momentum was stronger than thought at the end of 2022, catching both the market and the Federal Reserve off guard.
• Friday sees the 2023 update with the market watchful to what it may mean for the timing of the first Fed rate cut this year.
• The market is in a growing mood to continue to test higher for longer-tenor yield.

By James Knightley | Padhraic Garvey, CFA

2023 seasonal adjustments changes suggested the Fed had more work to do

This Friday, the Bureau of Labor Statistics will publish the annual update of seasonal adjustment ((SA)) factors for consumer price inflation, ahead of the January CPI report on 13 February. This will lead to revised MoM% CPI prints for the past five years using those adjustments. Importantly, the non-seasonally data doesn't change, so the full-year YoY% numbers will remain unchanged....

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