The tendency for consensus estimates for the Personal Consumption Expenditures (PCE) Price Index to be reasonably accurate points to a combination opportunity with IBKR Forecast Contracts and this Friday’s release of the Fed’s preferred inflation gauge.
Since the Consumer and Producer Price Indices are released earlier in the month and are significant inputs for the PCE Price Index, the results of the indicator have been well telegraphed by Wall Street over the years. This characteristic supports the likelihood that the forecast for a 2.5% year over year February increase will be correct. With that in mind, the “No” answer to the IBKR ForecastTrader Contract asking, “Will the year-over-year change in US Personal Consumption Expenditures Price Index exceed 2.6%,” priced at $0.72, and the “Yes” answer to the IBKR ForecastTrader Contract asking, “Will the year-over-year change in US Personal Consumption Expenditures Price Index exceed 2.3%,” priced at $0.86, in my view, have strong potential for being correct and paying, in total, $2. The total cost of the trade, which offers a favorable risk/reward balance in my opinion, would be $1.58. In conclusion, if the headline figure comes in above expectations at 2.6%, or below projections at 2.4%, the combination trade is still profitable, delivering $2 to the investor.
Source: ForecastEx
Note: Prices are highest bids as of the morning of March 26, 2025.
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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.
Disclosure: ForecastEx Market Sentiment
Displayed outcome information is based on current market sentiment from ForecastEx LLC, an affiliate of IB LLC. Current market sentiment for contracts may be viewed at ForecastEx at https://forecasttrader.interactivebrokers.com/en/home.php. Note: Real-time market sentiment updates are only active during exchange open trading hours. Updates to current market sentiment for overnight activity will be reflected at the open on the next trading day. This information is not intended by IBKR as an opinion or likelihood of a potential outcome.
Disclosure: Forecast Contracts
Forecast Contracts are only available to eligible clients of Interactive Brokers LLC, Interactive Brokers Hong Kong Limited, and Interactive Brokers Singapore Pte. Ltd.
Divulgación: ForecastEx
Interactive Brokers LLC es un Comerciante de Comisiones de Futuros registrado en la CFTC y miembro compensador y afiliado de ForecastEx LLC ("ForecastEx"). ForecastEx es un Mercado de Contratos Designado y una Organización de Compensación de Derivados registrada en la CFTC. Interactive Brokers LLC proporciona acceso a los contratos de pronóstico de ForecastEx para clientes elegibles. Interactive Brokers LLC no hace recomendaciones con respecto a los productos disponibles en su plataforma, incluidos aquellos ofrecidos por ForecastEx.
Disclosure: Futures Trading
Futures are not suitable for all investors. The amount you may lose may be greater than your initial investment. Before trading futures, please read the CFTC Risk Disclosure. A copy and additional information are available at ibkr.com.
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