US CPI could put the S+P 500 and the VIX in the spotlight later today

The Fed is not widely expected to raise interest rates next Wednesday at 6pm GMT. There are some that think they might and we previously noted how 65 out of 95 economists polled think they will not. So, as you can see the majority think no change, BUT the CPI data due out later today could have a bearing on what the Fed may, or may not do next week. 

So, today the markets expect headline US consumer prices (CPI) to have risen by 0.4% last month, up from the prior reading of just 0.1%. However, the core monthly rate (Ex Fuel) is expected to remain unchanged at 0.2%. The annualised core rate is expected to fall slightly, from 2.5% to 2.4%. So, it is that core rate which will draw the most attention from the Fed next week. 

If the core rate on an annualised basis in particular does not fall, or perhaps even rises, that is going to shake the tree a good deal this afternoon and the dollar will benefit and stocks will not. Naturally the opposite applies too. 

So, this data is really important later today and it could throw up some significant moves, but only if we get a surprise either way. The focus here is on stocks and the broader markets because the S+P 500 volatility index (VIX) rose quite a bit at one point yesterday reaching 18.05. Prior to that it had been languishing around the 15 mark. 

The index itself traded as low as 7,580.06 and later closed 44.66 points lower, at 7,591.70. The futures have been on the rebound today though and priced the opening as high as 7,629 earlier, but that is all, due to the downside reversal in the oil price this morning. This index and the VIX will be in the spotlight later and of course so will oil, but the CPI report might just be what tips the balance. We shall have to see on that. The S+P 500 is currently priced to reopen around 7,622