In the "data shortage" era, the CPI is coming. Will the market be surprised or pleased tonight?

This month, Wall Street is extremely eager for data, and the September Consumer Price Index (CPI) report released on Friday has almost become the sole focus, making it more likely to become a key event affecting market trends. Although actual data is expected to remain relatively flat compared to the past few months, the government shutdown has severely affected official economic reports. Even a slight deviation in the data could lead to market volatility far beyond the usual. "With no government data received recently, I believe all of the market's focus and attention will be on this report," said Troy Ludtka, senior US economist at SMBC Nikko Securities. "The importance of this report can be said to be 'make or break'." However, according to the general expectations on Wall Street, the CPI data released by the US Bureau of Labor Statistics is likely to continue the previous trend. According to a Dow Jones survey, economists predict that the overall CPI will rise by 0.4% month-on-month in September, unchanged from August; the year-on-year increase will be 3.1%, up 0.2 percentage points from August. The core CPI, which excludes food and energy, is expected to increase by 0.3% month-on-month and 3.1% year-on-year, both unchanged from August. If the year-on-year data is accurate, it will reach the highest level since January of this year. What Wall Street is really focused on is whether the data will deviate from expectations - whether it is a signal of "overheating" with inflation higher than expected, or a sign of "cooling" lower than expected. Additionally, the impact of Trump administration's tariff policies on prices, as shown in the details of the report, will also be a key observation point. This report, originally scheduled to be released on October 15, will also be the last important economic data before the Federal Reserve's policy meeting next Wednesday. The US Bureau of Labor Statistics has recalled some employees to complete data compilation as the CPI is a core benchmark for adjusting the cost of living for social security. Data Fog Goldman Sachs economists predict that car prices will remain relatively flat in September, car insurance costs will increase slightly, and airfare prices will decrease. Regarding the impact of tariffs, Goldman Sachs pointed out in the report that prices for categories such as communication, household goods, and entertainment may face "upward pressure", but the expected drag on core inflation will only be 0.07 percentage points. However, in the context of a massive government shutdown, overall economic data is like a black box, raising doubts about the reliability of the CPI data. "Due to the government shutdown, critical data points that the market relies on are missing, and we cannot get a comprehensive and clear economic picture," said Vishal Khanduja, broad market fixed income manager at Morgan Stanley Investment Management. "This will undoubtedly further exacerbate market uncertainty." In fact, investors have been on edge recently, despite continuous intraday volatility, with major stock indices hovering near historic highs. Geopolitical uncertainty is the core source of concerns, especially the constantly changing tariff situation - the market fears that rising prices may drag down the current stronger-than-expected economic growth. Although the government shutdown may disrupt data accuracy, this CPI report can at least to some extent provide answers to these questions. This report is crucial for both the market and the Federal Reserve. The Fed is scheduled to hold a policy meeting next week, and officials are widely expected to approve another 25 basis point interest rate cut. "In terms of market impact, only a significant surprise higher than expected in the data could potentially change market expectations for another rate cut," said Julien Lafargue, chief market strategist at Barclays Private Bank. In addition to the fluctuating trade war, a new round of strong earnings season has also provided support for the market. Before the government shutdown, economic data had shown that the US economy was more resilient than expected: according to data from the Atlanta Fed, GDP growth in the third quarter is expected to be close to 4%. Although breaking the narrative of the current "strong economy" requires a significant event to drive it, an unexpected result in the CPI report may be enough to be that "catalyst". "If inflation data is higher than expected, I think the market will see volatility," said Stephanie Link, chief investment strategist at Hightower Advisors. "But I would see it as a buying opportunity - after all, the current economic fundamentals are strong, the Federal Reserve has started an interest rate cutting cycle, corporate earnings are growing at double-digit rates, and the fourth quarter is traditionally the strongest quarter of the year performance-wise."