Inflation in Focus: Rektober to Uptober?

Macro Markets

The Consumer Price Index report for September 2023 will be released on Thursday, October 12, at 8:30 a.m. ET. The headline consumer prices are expected to rise by 0.3% M/M in September (prev. +0.6%), and the core rate of inflation is expected to rise by 0.3% M/M (prev. +0.3%). The upside in gasoline prices is likely to support the headline. While inflation pressures will continue to ease through year-end, the moderation will be rockier than over the last year. This is particularly true for headline inflation, where a reversal in energy prices will contribute to upward pressure in the near term. The data will be framed in the context of Fed policy, where any upside, particularly in core prices, will likely tilt the market's implied path in a hawkish direction; any downside relative to consensus, however, will likely see markets continue to price the path of future rates more dovishly than the Fed's current dot plot.

The Cleveland Fed (NOWCAST) currently sees inflation for September 2023 coming in at 0.39% for the month for headline CPI and 0.36% for core CPI once food and energy are stripped out. That translates to a 3.7% annual rate for headline CPI and 4.2% for core CPI. If this nowcast holds, it will continue the recent trend of headline inflation accelerating as core inflation cools.

The Fed tends to focus more on core CPI indicative of longer-term inflation trends. Here, a decline would be welcome, but the Fed is still concerned that with inflation around 4%, there is still some way to go to meet its 2% annual goal. Also, remember that nowcasts have tended to overstate inflation in recent months.

Shelter costs will be one of the most significant numbers in Thursday’s CPI report. Shelter makes up a large portion of most households’ expenditures, and so it carries a high weight in the CPI series. Recently, shelter costs have seen disinflation, and if that trend continues, it may help move core CPI lower.

The Fed is watching incoming economic data closely and may raise interest rates one more time in 2023 if it doesn’t see inflation continue to cool.

The Feds Summary of Economic Projections showed a broadly even split between raising rates and holding them steady over the remainder of 2023. Fixed income markets, as assessed by the CME Futures market, are more dovish, believing the chance of a November or December interest rate hike is somewhat fading.

The current assessment is that there’s currently a 1 in 4 chance of a hike coming in later this year, according to the implicit forecast of fixed-income markets. The upcoming CPI report will be informative. Headline inflation may increase based on energy costs, but the Fed will watch core CPI closely for further evidence of inflation moving back to its 2% goal.


At its September meeting, the Fed voted unanimously to keep interest rates steady at 5.25-5.50%, in line with expectations. The central bank upgraded its language about the economy, stating it's growing at a "solid" pace instead of "moderate." It also recognized that job gains have slowed recently but are still strong. Policymakers believe that inflation is high and the unemployment rate is low. In its updated economic forecasts, it raised expectations for real GDP growth in 2023 and 2024 and lowered its unemployment rate projections. Inflation is expected to be 3.3% in 2023, 2.5% in 2024, and 2.2% in 2025 for headline PCE. Core inflation is projected at 2.6% in 2023, 2.6% in 2024, and 2.3% in 2025. The "dots" were revised hawkishly, and the central bank still sees a further rate hike this year, while for next year, it now only sees the prospect of 50bps rate cuts (vs. 100bps in its previous SEP).

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Wellness Wizdom

MENTAL HEALTH: Supplements to boost your mood!

When you deprive yourself of basic physiological needs like healthy food and sufficient rest, your body can go into overdrive. You may feel sluggish and notice that you are more stressed and emotional and have difficulty responding to pressure. Though this is not a quick or permanent fix, there are some ways to ease these negative feelings and effects through proper supplementation. If you feel unusually out of sorts, it might be worth speaking to your healthcare provider for more insight.

Vitamin D is absorbed directly through 15 minutes of daily direct sun exposure. Many North Americans suffer from a Vitamin D deficiency in the colder months of fall and winter. Vitamin D deficiency has been linked to mood disorders, anxiety, and seasonal depression. Take Vitamin D daily to help improve your energy levels and mood.

B12 is a supplement that greatly decreases feelings of sluggishness and fatigue. Someone who is B12 deficient will always feel low energy, tired, and unmotivated.

Ashwagandha is a mushroom extract that has been linked to better mood and decreased anxiety. It works to balance the central nervous system, making you feel calm. It is also known to calm stress responses.

Magnesium is a supplement that EVERYONE should take advantage of. It is essential in stress management and is actually known as the “anti-stress mineral.” Because it’s difficult to get enough magnesium in your diet alone, so everyone should try it. In addition to easing your stress, it also increases your sleep quality, making you feel rested and refreshed when you wake.

Zinc strengthens the immune system, promotes a healthy metabolism, and benefits brain function. It helps you keep yourself healthy and focused, also improving your mood.

Omega 3 works to improve focus and performance. It helps build connections in the brain that prevent us from feeling foggy or clouded.

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