Higher CPI but rate will be unchanged in Sept. FOMC?

Tiger_comments
2023-09-13

US headline CPI in August is 3.7% year-on-year, after rising by 3.2% in July; US core CPI growth in August is 4.3%, down from 4.7% in the previous month.

CPI tonight will set the tone for the US dollar and risk assets in general the near term.

CPI estimates from major institutions

 

Energy-related segments push up CPI

The expected increase in oil prices drives most of the headline CPI growth.

The Bureau of Labor Statistics cites

rent, owners' equivaalent rent, motor, vehicle insurance, medical care, and personal care as pushing up core.
Lodging away from home, used cars and trucks, and recreation pushed it down.

Supercore CPI edged up on a monthly basis, the second straight increase. The Fed focuses on this number for a more "true" reading of inflation. In August, transportation services were the biggest contributor.

There is a big turn-around in airline fares.

Interest rate will be unchanged in September

Fed pays attention to core CPI and services inflation other than housing, which is closely related to the job market. Oil prices surge may not affect rate hike decision.

With hotter headline CPI and declining core CPI, CME's FedWatch tool indicates the market estimates about a 93% likelihood that the Fed will keep interest rates unchanged at the policy meeting on September 20th.

The market might be volatile tonight but won’t drop much as there are no more surprises in August CPI. $10-YR T-NOTE - main 2312(ZNmain)$ $S&P 500(.SPX)$

Sep. CPI: Will rate hike pause in November?
September headline CPI is 3.7%, slightly higher than consensus of 3.6%; core CPI is 4.1%, lower than previous data of 4.3%. ---------------------------- Any thoughts on the CPI data? Will rate hike pause in November? How to trade after the CPI report?
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