Can traders trust inflation data forecasts this week?

8 feb 2022

Can traders trust inflation data forecasts this week?
07 Feb – 12 Feb, 2022

This week’s trading takes place in the shadow of last week’s Non-farm Payrolls number, out-doing analysts’ expectations by a considerable margin. Non-farm Payrolls recorded 467K jobs added to the US economy in January vs an expected 150K gain. Investors will be cautious of this week’s predictions, especially as it applies to inflation data.

Thursday, February 10:
Brazil Inflation Rate YoY JAN
Mexico Inflation Rate YoY JAN
Russia Inflation Rate YoY JAN

Inflation data across three emerging economies should draw investor interest on Thursday. In order of appearance, Brazil, Mexico, and then Russia’s results will be rolled out through the morning.

Brazil and Russia’s readings are expected to keep rolling onto new multi-decade highs. In contrast, Mexico’s reading is expected to cement the idea that inflation has peaked in the country as it records its second straight decline in its reading.

Brazilian inflation is expected to rise from 10.06% to 10.40%

Mexican inflation is expected to fall from 7.36% to 7.00%

Russian inflation is expected to rise from 8.4% to 8.8%


Friday, February 11:
US Inflation Rate YoY JAN

The Federal Reserve’s prediction that inflation will return to 2.6% sometime this year is unlikely to be encouraged by January’s reading of US inflation YoY. The market is predicting an increase in the inflation rate from its current 7.0% to 7.3%.

January’s reading is due this Friday morning.

Something to consider in relation to the inflation rate is that its biggest contributor, energy, has recently hit 7-year highs, with WTI and Brent crude both trading above US $90 per barrel.