LemonTrades
TL;DR
- CPI comes out at 8:30 AM ET once a month. The next report is Tuesday, November 10, then December 10.
- Traders focus on core CPI month on month against the forecast. Hotter than expected usually lifts the dollar and yields, and weighs on gold and stocks.
- As of November 6, gold typically moved about 0.69% in the 30 to 60 minutes after the last six reports, bitcoin 0.93% and S&P 500 futures 0.34%.
- Spreads widen at the release, so decide in advance: stand aside, cut your size, or wait about 15 minutes and trade what holds.
- LemonTrades warns you 15 minutes before, and gives you the result and what it means about a minute after.
With inflation well above the Fed’s goal, CPI day can reset what markets expect from interest rates in a minute. New to it? Start with what CPI is.
What markets did after the last six CPI reports
Loading the last six reports…
“Typical move” is the average size of the move, up or down. The figures come from our own price log, and six reports is a small sample: use them to size your risk, not to guess the direction.
Bitcoin has had the biggest typical move, and S&P 500 futures rose after five of the six reports. The one exception was their biggest move, covered below.
Which number matters
| In the report | Why traders watch it |
|---|---|
| Core CPI, month on month | Leaves out food and energy, and shows the latest trend. Often the number that matters most |
| Headline CPI, year on year | The inflation figure in the news |
| Core CPI, year on year | The slower-moving trend |
| Housing and energy | Explain why a number surprised, and whether it might last |
Always compare with the forecast. Markets have already priced in what they expect, so a high number that matches the forecast may barely move them.
How CPI moves markets
| If CPI is | Dollar and yields | Gold | Stocks and bitcoin |
|---|---|---|---|
| Hotter than forecast | Usually up: rates stay higher | Usually down, even though gold is an inflation hedge | Usually down |
| Cooler than forecast | Usually down: rate cuts more likely | Usually up | Usually up |
A recent example: October 14
September’s CPI came in hotter than forecast on both measures: 3.7% from a year earlier against 3.6% expected, and core up 0.3% on the month against 0.2%. In the next 30 minutes everything moved the way the table above says it should:
| Market | 30 minutes after |
|---|---|
| Gold | −1.33% |
| EUR/USD | −0.61% |
| USD/JPY | +0.26% |
| S&P 500 futures | −0.69% |
| Bitcoin | −1.39% |
When headline and core point the same way, the message is clearer. When they conflict, expect a messier first few minutes.
A plan for release day
| When (ET) | What to do |
|---|---|
| The day before | Check the forecasts for headline and core. Mark your key levels. Decide which approach you’ll use. |
| 8:15 AM | Close or cut anything you don’t want to hold through the number, and cancel resting orders that a spike could trigger by accident. |
| 8:30 AM | Don’t chase the first seconds. Read core and headline against the forecasts. |
| 8:31–8:45 AM | Do they agree? Check the 2-year yield and the dollar: are they confirming the move? |
| After 8:45 AM | Trade only if the price holds beyond a level you marked, with a stop based on the size of the move and a smaller position than usual. |
| Afterward | Write down what happened and what you did. |
Three ways to approach it
- Stand aside. Be flat at 8:30 and come back when spreads return to normal. This is the sensible default.
- Reduce. Hold a smaller position, with room for the typical move in the table above.
- Trade the reaction. Let the first 15 minutes settle, then trade what holds.
Try your plan first in the trade simulator. Gold traders: see how to trade gold.
Common mistakes
- Looking at the level of inflation instead of the surprise against the forecast.
- Trading the headline when core says the opposite.
- Assuming a stop will fill at its price. In a spike it can fill well past it.
- Forgetting that PCE inflation, the Fed’s preferred measure, comes later in the month and can change the story.
How LemonTrades helps
- A heads-up 15 minutes before every CPI report, so it never catches you in a trade by surprise.
- The result about a minute after, against the forecast, with which way it pushes each of your markets and why.
- An optional squawk that reads alerts aloud on the website, so you can keep your eyes on the chart.
- Keyword alerts: up to 10 words of your own, matched in every new headline.
- The week ahead and a morning brief, with each market’s bias and key levels.
Rates and yields live: the 2-year Treasury yield and the 10-year. The other big two: how to trade NFP and how to trade FOMC. All the dates: the economic calendar.
Sources
- BLS: Consumer Price Index summary
- BLS: CPI release schedule
- LemonTrades: price moves after the last six CPI reports
Education, not financial advice. Trading around big releases is risky and you can lose money quickly. Past moves don’t predict future ones. See our disclaimer.
