Investors’ eyes are eagerly fixed on the March inflation data set to be released by the Bureau of Labor Statistics on Wednesday.
According to the consensus among economists, the annual Consumer Price Index (CPI) inflation rate for March is expected to rise to 3.4%, up from the previous 3.2%, while core inflation, which excludes energy and food items, is anticipated to ease slightly from 3.8% to 3.7%.
Both monthly readings are projected at 0.3%, a slight deceleration compared to the 0.4% observed in February.
Wells Fargo sits at the high end of the forecast range, predicting a headline rate of 3.5% and a core rate of 3.8%. The robustness of headline figures is attributed, in part, to the uptick in gasoline prices, with expectations of a strengthening in food inflation as well.
Analysts at Wells Fargo anticipate March’s report will reveal hints of two inflation dynamics: early-year noise and a longer journey of inflation back to the Fed’s target.
On the softer side, Bank of America expects a headline rate of 3.3% and a core rate of 3.7%. It anticipates a more subdued inflation profile in March’s report, with core inflation moderating to 0.24% month-over-month and headline inflation at 0.25%. The primary factor behind March’s disinflation compared to February is a 0.05% monthly decline in core goods prices, driven by a decrease in used and new car prices.
"A report in line with our expectations would leave us more confident with our call for the Fed to start its cutting cycle in June… a much firmer report is the key risk to our policy outlook,” Bank of America economist Stephen Juneau wrote.
Presently, market participants are estimating a 57% likelihood of a rate cut in June, while also factoring in a total of 70 basis points in Fed cuts by the end of the year.
March CPI Preview: What Wall Street Economists Expect
CPI | February realized | March median consensus | March Highest (Wells Fargo) | March Lowest (BofA) |
| Core (M/M) | 0.4% | 0.3% | 0.3% | 0.2% |
| Headline (M/M) | 0.4% | 0.3% | 0.4% | 0.3% |
| Core (Y/Y) | 3.8% | 3.7% | 3.8% | 3.7% |
| Headline (Y/Y) | 3.2% | 3.4% | 3.5% | 3.3% |
ETFs Reacting To Previous CPI Data
The most recent inflation report for February, released on March 12, came in hotter than expected, with the annual headline CPI rate reaching 3.2%, surpassing the anticipated 3.1%.
The annual core CPI rate slowed from 3.9% to 3.8%, though it still surpassed market projections of 3.7%.
5 ETFs Surging After February’s CPI Data
- VanEck Semiconductor ETF SMH, closing 3.2% higher on March 12
- Roundhill Magnificent Seven ETF MAGS, up 3.1%.
- Technology Select Sector SPDR Fund XLK, up 2%.
- Invesco QQQ Trust QQQ, up 1.4%
- Consumer Discretionary Select Sector SPDR Fund XLY, up 0.9%
5 ETFs Falling After February’s CPI Data
- U.S. Global Jets ETF JETS, down 2.2%.
- Utilities Select Sector SPDR Fund XLU, down 1%
- iShares Bitcoin Trust IBIT down 1%.
- iShares 20+ Year Treasury Bond ETF TLT, down 0.8%
- Real Estate Select Sector SPDR Fund XLRE, down 0.4%.
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