Investors are set to gain crucial insights into the impact of the Trump administration’s trade war on U.S. inflation with the release of delayed consumer price index (CPI) data on October 24. This delayed release comes as a result of the ongoing government shutdown, which has stifled the publication of key economic indicators. Initially scheduled for release on the previous Wednesday, the Federal Reserve has called in a limited workforce to ensure the data is issued, offering a more comprehensive view of inflation pressures in the world’s largest economy.
As the release date approaches, concerns loom regarding ongoing price pressures, leaving many investors feeling “flying blind” in the current economic climate. With reliable information scarce, they have turned to private data and sources like the Fed’s Beige Book for guidance. Economists surveyed by Reuters predict an increase in the annual inflation rate to 3.1 percent from 2.9 percent, with the core inflation rate expected to remain at 3.1 percent. This data will play a significant role in discussions during the upcoming Federal Reserve meeting beginning October 28, where the central bank has been adjusting its focus towards a potentially weakening labor market rather than solely concerns over inflation.
In a related note, traders are currently factoring in a 0.25 percentage point interest rate cut this month, with an additional reduction expected in December. Until the delayed CPI data is released, major market decisions may be placed on hold, further complicating forecasts for interest rates and corporate earnings.
Across the Atlantic, UK investors are bracing for the release of September’s inflation figures, which are anticipated to have risen to 4 percent, the highest rate since late 2023. This increase is expected to reflect ongoing price pressures stemming from higher fuel, airfare, and clothing costs, as well as a delayed impact from VAT changes on private school fees. A notable rise in services inflation, which is closely monitored for domestic price pressures, is also expected.
If inflation numbers in the UK exceed expectations, particularly in the services sector, it could strengthen arguments for maintaining higher interest rates for an extended period. Current trader sentiment indicates a roughly 50 percent chance of a rate cut by December, with a cut fully anticipated by March. Despite some signs of inflation easing, concerns remain, especially regarding food prices, which saw inflation hit 5.1 percent in August, the highest since January 2024.
On the other side of the globe, China is set to release a series of economic indicators on Monday, including third-quarter GDP data, which is expected to show a deceleration in growth amidst an intensified trade conflict with the U.S. Economists forecast a growth rate of 4.8 percent year-on-year for the third quarter, down from 5.2 percent in the second quarter. This slowdown reflects Beijing’s attempts to reduce excess production capacity in response to deflationary pressures and has led to a sharp decrease in fixed-asset investment.
Despite these domestic challenges, China’s export sector has demonstrated resilience, with exports rising by 8.3 percent in September. Analysts have suggested that this unexpected strength in exports may counterbalance the anticipated weaknesses in domestic investment. The forthcoming data release will also include retail sales, industrial production, and fixed-asset investment figures, along with the announcement of the five-year loan prime rate, which analysts expect to remain at 3.5 percent.
As the economic climate evolves, experts believe that changes in policy direction are unlikely. China’s current economic model continues to emphasize technology and manufacturing while shifting investment away from real estate. The prevailing sentiment is that the government will maintain this approach despite ongoing pressures in the domestic market.
