October Inflation Unexpectedly Crumbles Amid Biggest Drop In Rents In 15 Years

This Thursday at 8:30am, the BLS was supposed to publish its monthly CPI report, perhaps the most important number for the roughly half of hawkish voters inside the Fed (for whom the inflation mandate is now more important than employment for various political reasons), and therefore the key number for the Fed's December decision. Alas, since the government will most likely reopen just hours earlier and the various government workers won't have time to compile the report, this will be the second CPI report in a row which will not be published by the US government.

Conveniently, just like with various alternative labor market indicators (which we noted earlier have shown a sharp deterioration in US jobs in the past month), there are other indicators traders can look toward to handicap odds of a December rate cut and also what the CPI print - when it finally does come - will show. 

We start with OpenBrand price data, according to which US consumer durables and personal goods inflation decelerated notably in October for the first time in three months, reflecting a pickup in the degree of merchant discounting (i.e. underscoring the acute consumer weakness we discussed recently).