Important matters must be prepared in advance!

This data is the first monthly price index unaffected by the government shutdown, providing significant guidance. Due to the government shutdown in October causing data gaps, November data has technical deviations, and December data will reflect the true price level. The market expects the overall CPI to increase by 0.3% month-on-month, and core CPI to increase by 0.3% month-on-month.
December CPI data will have an important impact on the Federal Reserve's January meeting decision, with specific impacts as follows:
1. Impact of CPI higher than expectations (>2.7%)
Policy impact: If CPI exceeds expectations, it will reinforce the Federal Reserve's stance to keep interest rates unchanged, and may even delay the subsequent rate cut schedule. Currently, the market expects a 95% probability of holding interest rates steady in January, and higher-than-expected inflation data will further solidify this expectation.
Market reaction: The US dollar index may strengthen, Treasury yields may rise, and the stock market may come under pressure. According to JPMorgan Chase, if core CPI month-over-month exceeds 0.45%, the S&P 500 may decline by 1.25%-2.5%.
Core reason: Persistent inflation stickiness remains, still far from the Federal Reserve's 2% target, and tariff policy costs have not yet been fully transmitted to consumers. Inflationary pressures may further emerge in the coming months.
2. Impact of CPI lower than expectations (<2.7%)
Policy impact: If CPI falls below expectations, market expectations for a Federal Reserve rate cut will increase. Previously, when November CPI was below expectations, market expectations for a rate cut in January rose from 26.6% to 28.8%.
Market reaction: The US dollar may weaken, Treasury yields may decline, and the stock market may rise. If core CPI month-over-month is below 0.30%, the S&P 500 may rise by 1.25%-1.75%.
Core reason: Easing inflationary pressures provide space for the Federal Reserve to cut rates, but attention should be paid to the fact that November data was affected by the government shutdown and may contain technical distortions. December data will more accurately reflect the price level.