CPI Y/Y
Consensus: 3.4% (67% of forecasts)
Upper tail: 3.8% (4%), 3.5% (4%)
Lower tail: 3.3% (25%)
CPI M/M
Consensus: 0.4% (76%)
Lower tail: 0.3% (23%), 0.2% (1%)
Core CPI Y/Y
Consensus: 2.4% (82%)
Upper tail: 2.7% (2%), 2.5% (6%)
Lower tail: 2.3% (10%)
Core CPI M/M, the key measure
Consensus: 0.2% (88%)
Upper tail: 0.3% (10%)
Lower tail: 0.1% (2%)
The key point, distribution over range
Forecast dispersion matters as much as the consensus figure
CPI M/M distribution heavily clustered toward the upper end (76% at 0.4%)
A result even within range but at the lower bound (0.3%) could still trigger a dovish surprise effect
The context that changes everything
Waller conditioned his support for a September hike on an upside core M/M surprise
That stance predates WTI's surge above $100
Consistent with the already-documented narrative (Brent above $100, PPI +0.4% driven by diesel +24%)
September hike odds already repriced to 67%
The trap for the Fed
A CPI simply in line with consensus may no longer be enough to pull the market back
With hike odds already elevated ahead of the FOMC, the Fed could be forced to deliver just to avoid a dovish surprise
Implications
DXY: asymmetric setup
Soft core CPI (0.1% or below): the only scenario for real dovish relief
In-line core CPI (0.2%): likely not enough to reverse the hawkish narrative
Hot core CPI (0.3%): would amplify risk sentiment, strongly reinforce the dollar
Overall bias asymmetrically dollar-supportive barring a notably soft print
Point of caution
The oil backdrop has shifted since Waller's statement, potentially making his original criterion obsolete
This CPI is no longer a simple binary surprise test but an arbitration between two already competing narratives (hawkish Warsh vs dovish Waller)