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Posted June 23, 2025 at 11:00 am
Canada’s May Consumer Price Index (CPI) is due tomorrow at 8:30 a.m. ET and the consensus expectation is for a 1.7% year-over-year increase. The projected result would mark an unchanged reading relative to April. But this series has been tougher to predict than CPIs from other developed nations, sporting a greater deviation rate, meaning that the beats and misses alike have been wider than typical. Still, it’s difficult to envision this Tuesday’s figure arriving north of 2.1%, which would require a 0.5% move in excess of the median estimate at 1.7%. For this reason, I like buying the “No” answers at the 2.1%, 2.3%, 2.5% and 2.7% thresholds, which look undervalued to me and are going for $0.68, $0.83, $0.96 and $0.96. I also think the risk-reward profile of the “Yes” answer at the 1.3% level is attractive at $0.96, supported by a Reuters poll of 16 economic forecasters of which the weakest anticipation is 1.5%. Finally, the path to a 1.3% annualized inflation pace is especially narrow in light of recent cost trends and would be the lowest print since February 2021, over four years ago.
Source for Images: ForecastEx
Note: Prices are highest bids as of the morning of June 23, 2025. Red circles around the thresholds were inserted by J. Torres to highlight his preferred “Yes” and “No” answers throughout different levels.
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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.
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