What you're here for, upfront
US CPI lands this Wednesday, October 14, at 8:30am ET. The forecast is 3.6% and the last reading was 3.4%. Here is where to go:
- Free economic calendar, with the playbook for every outcome: https://www.mrktedge.ai/economic-calendar
- Free masterclass on why markets actually move: https://www.mrktedge.ai/masterclass
- MRKT In The Morning, live and free on X and YouTube every trading day at 8:20am EST. On Wednesday, that is ten minutes before CPI prints. @MRKT_AI
- Everything else: https://www.mrktedge.ai
We have collectively traded thousands of red folder events and share the exact step by step process in this article while also explaining what CPI actually means this time around.
Red Folder doesn't mean stay out
There is a reason traders circle this date every month, and it is not the number itself. It is how fast the market rearranges itself in the seconds after the number lands. The traders who get hurt are usually the ones who learned about the release from the price move. The traders who come out ahead tend to have decided what they would do before it printed.
You should treat red folder events as opportunities that, with the right knowledge, can mark steep climbs in your equity curve. We're here to bring you that exact knowledge.
Macro lets you trade it
The reason CPI makes markets move is simple: it might change the expectation of what the fed will do next and if you haven't noticed this by now: what the fed does next is the single most important thing markets pay attention to.
Understanding this, you have to know two things:
- Markets are currently expecting the fed to hold rates, meaning no change at all
- Markets are expecting an INCREASE in YoY inflation from 3.4% up to 3.6%
So the question you have to ask yourself is simple: will a higher inflation reading raise rate hike expectations? And will a lower reading kill rate hike fears this year entirely? The answer is yest to both of these questions.
This is the key puzzle to piece together and the exact information that lets you profit from CPI: the context behind it and the effect on your asset. It is also the exact reason why traders get burned on every single red folder day.
They don't show up with a gameplan, they're not even giving educated guesses, they're placing buy stops and sell stops at the same time and think this plan will outsmart the markets.
What it means for Gold, ES and NQ
All you have to know, is how the data and subsequent repricing will impact the US dollar, since assets like Gold, ES and NQ are traded against it.
Hotter than forecast. A reading above 3.6% raises the odds of another rate increase. Higher rates make simply saving money more rewarding, which is why the Dollar moves bullish on hawkish rate path expectations.
Right on forecast. A reading of 3.6% won't have much impact at all. Why? because that is what markets are already expecting and the numbers would not move interest rate expectations.
Cooler than forecast. A reading below 3.6% takes pressure off the Fed. Gold and stocks usually breathe easier. A number under last month's 3.4% would be the strongest version, because it would suggest prices are genuinely cooling and not just rising less than feared. Dollar would see drastic and sudden outflows in case of a miss of even previous numbers.
The step-by-step gameplan
Follow this exact framework and you will come out successful on Wednesday. Check the resources listed in the next paragraph.
- Understand the principle behind why CPI makes markets move in the first place. As explained above, it all comes down to expectations of what the fed will do next. Our free masterclasses teach you everything you need to know.
- Study and use the economic playbooks that come with our free calendar. We explained the impact above. Use every outcome and map scenarios for your assets like Gold, ES, NQ or BTC.
- DO NOT enter right at the drop. Let the trade present itself by ignoring the first 15m candle and price whipsaws. If the market shows direction that lines up with your scenario, follow it.
- Halve your position sizing. If you're new to trading red folder events, it's important to not let emotions take over and actively prevent that from happening. Reduce your risk to mitigate potential damages.
Congratulations, you now have a structured gameplan, backed by macro fundamentals and are able to profit from the most volatile days of the month.
This framework works for EVERY red folder event and we just gave it to you free of charge.
Free MRKT resources
Use the economic calendar. Check the forecast, read the playbook and see results within seconds of publication. No account and no card needed: https://www.mrktedge.ai/economic-calendar
Take the masterclass. Six episodes on how markets really move, including why good news can crash the market, which is exactly what can happen on a CPI morning. Episode one needs no account: https://www.mrktedge.ai/masterclass
Join MRKT In The Morning. Every trading day at 8:20am EST we go live on X and YouTube, free, to cover every high impact event with trade ideas and market insights powered by MRKT. On Wednesday we will be on air ten minutes before CPI, and we will walk through the print as it happens.
Red folder vents create the most amazing opportunities in the markets, it's just most chart traders don't have a single way of verifying which way the market will go, based on the outcome of the release.
MRKT is here to change that and bring macro closer to you.
Stay sharp.
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Trade CPI Like a Pro
-MRKT