Focus on Thursday CPI and Fed Speech: Why At Least 2% Increase of SPX.?

On Thursday, US will release its CPI data for December. The market consensus expectation is a year-over-year growth rate of 6.5%, a 5.7% year-over-year increase in core CPI.

The market is more concerned about the core CPI.

1. How do JPMorgan and Tiger's Analysts predict CPI and market moves?

JPMorgan believes that

The US December inflation is likely to be lower than the consensus estimate of 6.5%, thus will contribute to a rally.

If the CPI falls to the range of 6.4%-6.6%, the $S&P 500(.SPX)$ is expected to rise 1.5% to 2%.

If the CPI is below 6.4%, (JPMorgan believes there is a 20% chance), $S&P 500(.SPX)$ is expected to rise 3% to 3.5%

If the CPI is above 6.6%, risk assets will be hit and bond yields will rise.

Tiger's Analyst - Dr.Lan- believes that

The CPI for December is estimated to be 6.0%, below the current average of 6.5% expected by Wall Street analysts.

Dr. Lan infers the segments of CPI to be:

Energy is expected to continue to decline, with year-over-year growth of about 3% (November's year-over-year growth was 13%)
Food is expected to grow 10% year-over-year, similar to November's food growth of 10.6% year-over-year
Goods are expected to grow 2% year-over-year, down from 3.7% in November
Services are expected to grow 7% year-over-year, slightly higher than November's 6.8%. (mainly from rent increases)

2. How do the market expect rate hikes in Feburary?

The consensus is 25 bps in Feburary.

3. Updates on Fed offcials' speech this week

Powell - no surprise

The tone of Powell's speech in Switzerland was that the Fed would not be influenced by politics, and the implication was that the Fed would continue with its current policy -- fighting against inflation.

Mary Daly, President of the San Francisco Fed - turn hawish but didn't affect market

Fed should mention interest rates above 5%, and the final level of interest rates is not yet determined.

After reaching the highest level of interest rates, it is reasonable to keep it for at least 11 months or more, which is longer than the current estimates. Market expects Fed should suspend interest rate hikes at the March meeting.

What's your expectation for December CPI?

Will CPI boost a rally on Thursday?

Will market close up/down after the release of CPI?

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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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Comments

Kok
2023-01-11
Kok
December CPI will definitely come down, it's already in the cards. A high base from last year's figures will be the main reason. The market is poised to close higher. But how high is the biggest question. If it can break out above the previous high and we get to see a higher high, then we would have probably seen the worst of the current bear market, even if a mild recession is heading our way. The markets are always 6-9 months ahead of the economy. The coming recession is obviously already priced in.
unitlancer
2023-01-11
unitlancer
[Miser] [Miser]
ethanlam
2023-01-11
ethanlam
warm huh
dghl
2023-01-11
dghl
Should be lower
CET 789
2023-01-11
CET 789
[Cool] [Cool] [Cool]
kiore
2023-01-15
kiore
好