Ayesha Tariq: Wedesday’s CPI data seems to be getting undue importance
US CPI Preview
Wedesday’s CPI data seems to be getting undue importance.
The market is considering this CPI print to be the one that will put a dampener on the Fed cutting rates.
Macro & Fundamental Analysis AyeshaTariq said:
“I don’t think so. I think the market reacts to it, for sure, but I don’t think that this will deter the Fed’s determination the way people think it might.
Headline inflation should come in higher tomorrow, with energy prices being the main source of the increase. The Fed has discussed time and again that food and energy are volatile categories and they don’t focus on it as much as core inflation. The core number should come in lower.
The spike in Used Cars is set to reverse and the Apparel prices have been tracking lower as well. The key concerns, however, remain Shelter Inflation and Insurance, both of which remain sticky.
However, overall, core inflation should come in lower, and as long as core PCE ends up at 2.6% (the Fed’s latest target for the year), they are in the clear to cut. Core PCE is currently at 2.8%YoY, as of Feb 2024.
As a reminder, here’s last month’s heat map:”
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Here’s what JPMorgan thinks could happen to the market tomorrow following CPI - CNBC