Thursday’s eurozone Consumer Price Index (CPI) was expected to reflect a rise from 2.6% to 2.9%, in light of significant energy cost pressures that have lifted the critical gauge. On Wednesday immediately prior to the release, a beat to the upside looked more likely than a downside miss, in my opinion, and the consensus agreed as the maximum projected value was at 3.5% across the 41 forecasters surveyed in the monthly Reuters survey. However, in the Interactive Brokers prediction market, the “Yeses” at 2.7% and 2.8% on Wednesday were significantly undervalued at $0.69 and $0.29, in my view. An in-line result at 2.9%, or a figure arriving ahead of expectations, would deliver $1.00 back to investors throughout both contracts.
EU GDP Still Expanding Nonetheless
Also as of Wednesday, the eurozone’s economic growth was expected to expand at a similar rate of 0.2% or 0.3% in the first quarter as the fourth and the Interactive Brokers prediction market priced a result ahead of 0.1% at 81% while a number that failed to exceed 0.4% carried a likelihood of 79%. The 42 forecasters in the monthly Reuters survey were at a median of 0.2% on Wednesday amidst minimum and maximum projections of 0.1% and 0.3%. The “No,” priced at 0.4% on Wednesday, appeared undervalued, in my opinion, since a statistic of 0.5% was highly unlikely considering the continent’s slow activity.
US PCE Inflation Expected Above 3.4%
Thursday’s US Personal Consumption Expenditures Price Index (PCE) was expected to rise from 2.8% to above 3.4% with a 57% likelihood, according to the Interactive Brokers prediction market as of the Wednesday. A 3.4% result would be the highest figure since 3.4% in September 2023; however, the consensus estimate was at 3.5%, and that would be the loftiest statistic going back to May of 2023, almost 3 years ago.
US Economy and Labor Market Expected Strong However
The weekly economic index and initial unemployment claims were expected to reflect robust conditions across the US landscape, however, with the Interactive Brokers prediction market on Wednesday projecting a number around 2.53% for the former indicator and roughly 212k for the latter, results that would remain near recent publications.
Forecast Contracts are only available to eligible clients of Interactive Brokers LLC, Interactive Brokers Canada Inc., Interactive Brokers Hong Kong Limited, Interactive Brokers Ireland Limited and Interactive Brokers Singapore Pte. Ltd.
Futures, event contracts and forecast contracts are not suitable for all investors. Before trading these products, please read the Forecast Contract Risk Disclosure. Displayed outcomes and prices are based on real-time market sentiment from ForecastEx LLC, an affiliate of Interactive Brokers Group. Interactive Brokers Ireland Limited does not make recommendations with respect to any products available on its platform, including those offered by ForecastEx.
Disclosure: Interactive Brokers Affiliate
Information posted on IBKR Campus that is provided by third-parties does NOT constitute a recommendation that you should contract for the services of that third party. Third-party participants who contribute to IBKR Campus are independent of Interactive Brokers and Interactive Brokers does not make any representations or warranties concerning the services offered, their past or future performance, or the accuracy of the information provided by the third party. Past performance is no guarantee of future results.
This material is from IBKR Macroeconomics, an affiliate of Interactive Brokers LLC, and is being posted with its permission. The views expressed in this material are solely those of the author and/or IBKR Macroeconomics and Interactive Brokers is not endorsing or recommending any investment or trading discussed in the material. This material is not and should not be construed as an offer to buy or sell any security. It should not be construed as research or investment advice or a recommendation to buy, sell or hold any security or commodity. This material does not and is not intended to take into account the particular financial conditions, investment objectives or requirements of individual customers. Before acting on this material, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice.
Join The Conversation
If you have a general question, it may already be covered in our FAQs page. go to: IBKR Ireland FAQs or IBKR U.K. FAQs. If you have an account-specific question or concern, please reach out to Client Services: IBKR Ireland or IBKR U.K..
Visit IBKR U.K. Open an IBKR U.K. Account