Whether it is Wall Street senior banks or global investors scattered around the world, they may set up their "alarm clocks" again today and wait for the arrival of 20:30 Beijing time...
The US Department of Labor is scheduled to release the highly anticipated August inflation data tonight. Many Wall Street analysts currently expect the year-on-year increase in U.S. CPI data in August is expected to fall further as gasoline, used cars and hotel prices fall further in the month. If that happens, it will mark a second straight month of slowdown since U.S. inflation soared to a 40-year high in June.
According to median media estimates for economists surveys, the US CPI is expected to rise 8.1% year-on-year in August, down from 8.5% in July. The month-on-month performance is expected to remain flat, down 0.1% in July.
(Image source: Zerohedge)
Excluding volatile food and energy prices, core CPI, year-on-year increase is expected to rise by 6.1%, higher than 5.9% in July; it is expected to rise by 0.3% month-on-month, and also rose by 0.3% in July.
The release date of the US August CPI data is quite sensitive, because in just one week, the Federal Reserve will hold a September interest rate meeting, which means that tonight's data will be the last major economic indicator before the Federal Reserve's resolution. At present, the Federal Reserve is in the "silence period" of the customary "silence period" before the interest rate meeting.
Investors with good memory may still remember that June was a very explosive inflation data released during the "silence period", which eventually caused the Fed to change its original plan and made the first radical decision to raise interest rates at 75 basis points in decades. Now, when US inflation begins to peak, will another inflation data released in the "silence period" affect the Federal Reserve's decision to raise interest rates again? People will obviously wait and see...
multiple signs show: will US inflation fall for the second consecutive month?
Last Thursday (September 8), local time, US Treasury Secretary Yellen said that the decline in gasoline prices may put further downward pressure on the overall CPI of the United States in August, although due to the Russian-Ukrainian conflict and the subsequent energy crisis , she believes that there is still a lot of uncertainty in the long-term inflation outlook in the United States.
Yellen's speech can actually be regarded as a preview of the CPI data of the US decision-makers tonight - in the inflation report released tonight, a drop in gasoline prices may become a key theme.
According to data from American Automobile Association (AAA), the price of unleaded gasoline in the United States has dropped from $4.22 per gallon at the end of July to $3.84 at the end of August, a drop of 9%. Concerns about the recession, coupled with a reduction in driving and dining out, have driven oil prices lower.
American Automobile Association spokesman Gross said, "This trend has helped gasoline prices fall steadily for three consecutive months. As the decline continues, more (regional) markets may soon see oil prices below $3 per gallon."
Of course, although gasoline is the most eye-catching, the areas where U.S. prices are expected to fall in August are obviously more than that. According to information from online travel website Hopper, air ticket prices have also dropped. Hopper data shows that the cheapest economy class ticket for domestic flights in the United States fell 11% from $312 in July to $277.
Similar fields include used car and hotel industries. According to Manheim, the wholesale prices of used cars that soared during the pandemic fell 4% month-on-month in August, one of the biggest drops ever. Information from the analysis company STR shows that hotel prices in August fell 4.6% compared with July. Although the month-on-month decline in prices in August is common in the hotel industry, this time the decline exceeded the average decline of 2%-3% in the same period before the epidemic.
If the above-mentioned key areas where prices are expected to fall can be confirmed in tonight's official inflation report, then the year-on-year increase in CPI in August further dropped from 8.5% last month to 8.1% of the market expectation, and the price remained flat on a month-on-month basis or even fell further, which is indeed very promising.
However, investors who bet on inflation have reached their peak cannot rest assured at the moment. In fact, there are still many areas where prices are still accelerating in August, and the food and healthcare industry may be representative of it - tonight's data is likely to show that food prices have continued to soar in the past month, and a range of goods and services prices are still far higher than the level a year ago. "The decline in fuel prices is driving inflation slowing, but there is still obvious price upward pressure in important categories such as food, household goods and healthcare products," said Alberto Cavallo, a professor at Harvard Business School. In 2008, he created a "billion price" index that tracks the amount of online transactions for consumers. He said, "We are not completely out of the predicament at the moment." A list of investment bank forecasts by
: How do Wall Street institutions view CPI data tonight?
Judging from the estimated distribution of 39 institutions surveyed by the media, the lowest forecast for the year-on-year data of the US CPI tonight is 7.9%, and the highest forecast is 8.3%. Most industry insiders' predictions are concentrated in the range of 8.0-8.1%.
(Attachment Forecast List) The range distribution of
actually shows two things, that is, once the CPI increase in in August was 8.5% the same as last month, or the CPI suddenly dropped to the "7 Era" (below 8.0%) in August, it will be a scenario that is "absolutely" beyond the market's expectations. Once these two situations that most investment banks believe are unlikely to occur, they may immediately cause a sensation in the market.
The following is some investment banks' forward interpretation of CPI data tonight:
Fasing Bank
Due to the plummeting gasoline price, we expect the overall CPI in August to fall by 0.1% month-on-month; the year-on-year increase of US CPI reached a peak of 9.1% in June, fell to 8.5% in July, and should further drop to 8.1% in August. We expect CPI to fall below 7% year-on-year by the end of the year, but uncertainty in energy prices casts a shadow on this forecast.
In terms of core CPI, we expect the core CPI monthly rate in August to be 0.4%, with a forecast of 0.6% increase based on housing costs, which is offset by weakness in clothing, automobiles and public transportation. In addition, we expect car prices to weaken in the coming quarters, but inventory is still tight due to semiconductor restrictions, which means greater uncertainty in monthly data forecasts.
Goldman Sachs Group
We expect core CPI to grow by 0.32% in August, which will drive core CPI to 6.1% year-on-year, 0.2 percentage points higher than last month. Our forecast reflects a decline in oil prices (we assume a 5% drop from the previous month) and weaker prices in the automotive category (new cars +0.75% min, used cars -1.25% and spare parts flat), mainly due to the easing of supply chain bottlenecks and the release of 2023 models sold by dealers.
However, due to wage pressure, labor shortage and short-term inflation expectations rise, inflation in the service industry is expected to continue to strengthen. Specifically, we expect housing data (rent +0.65%) to remain strong, with education prices rising by 0.6% as tuition and daycare fees for the new school year. We also expect the price of auto insurance to rise again as insurers will offset the rise in repair and replacement costs by raising prices. We expect the overall CPI to fall by 0.13% month-on-month in August, reflecting a decline in gasoline prices but an increase in food prices.
Commerzbank
Overall, we expect the monthly CPI rate to remain flat in August and the annual CPI rate increase may fall back to 8.1%. Although the inflation peak may have passed, it is too early to lift the alarm now. This is because the main reason for the recent decline in inflation is due to unstable factors such as energy prices. In contrast, rents, which are the most important component of CPI, are likely to continue to rise sharply at present. Therefore, the core CPI should rise to 6.2% in August.
ANZB
We expect the core CPI of the United States to rise by 0.4% month-on-month in August, and the overall monthly inflation rate will remain the same. The decline in energy prices has dragged down the overall inflation rate.
Wells Fargo
We expect the US CPI growth to slow further in August. The US CPI is expected to fall by 0.2% month-on-month in August, setting the largest single-month decline since the spring of 2020.A further decline in gasoline prices is expected to lead to a decline in overall CPI, while areas such as tourism services should help keep core CPI growing by 0.4% month-on-month.
We expect the Fed to be inspired by the continued decline in inflation since June, but the core CPI will continue to be much higher than the Fed’s target. The price of commodity has fallen in recent months and the supply chain bottleneck has eased, indicating that inflation will cool down in the next few months, but the growth rate of labor costs remains strong, indicating that it is not easy to keep inflation falling to the Fed's target level.
Global Market Focus: How will CPI affect Fed decisions tonight?
Although industry insiders are generally convinced that tonight's US CPI data will fall for the second consecutive month, it is not easy for investors to analyze what changes the data performance will bring to the financial market.
One of the most important reasons is that the market is currently generally believed that the Fed's interest rate meeting this month will raise interest rates by 75 basis points. In other words, unless the data tonight is far below the market forecast median (such as back to the 7th era), it will be difficult to easily change the Fed's decision to raise interest rates this month. 's performance in compliance with or slightly better than expected inflation data may therefore be limited in its boost to risky assets in the market.
CME Group's Fed observation tool pricing shows that the probability of the Fed raising interest rates by 75 basis points this month is as high as 91%, which will mark the third consecutive meeting of the Fed raising interest rates by 75 basis points. The expectations were strengthened after Fed Chairman Powell reiterated last Thursday that policymakers would not retreat and some officials expressed support for another sharp rate hike last Friday.
Federal Director Christopher Waller pointed out in his speech last Friday that it is too early to determine that inflation is significantly and continues to decline. He praised the rate hike again in the month. St. Louis Fed Chairman Brad also said in an interview with the media last week that even if the inflation data slowed in August, it may not change the Fed's path, and he tends to raise interest rates 75 basis points in September.
As of Monday, investors in the U.S. stock market seemed a little optimistic. All three major stock indexes recorded a gain for the fourth consecutive trading day, further expanding last week's gains. The U.S. Treasury market remains relatively cautious, and the interest rates of policy-sensitive two-year U.S. Treasury bonds are still at their highest level since November 2007.
According to industry statistics, among the eight US CPI release dates totaling so far this year, S&P 500 index fell five times and rose three times, with an average drop of 0.5%.
(Image source: Zerohedge)
For the market performance tonight, New York hedge fund WinShore Capital Partners Inflation Trader Gang Hu said, "After the release of the last CPI report in the United States, the market has changed a lot, and the market is certainly expecting a considerable decline in future inflation data than before. If these numbers are indeed fulfilled, you may see a round of rebound in the bond and stock markets after ease of concerns, but I don't think this round of eased rebound will continue."
He focused on reminding investors to pay attention to the performance of the core CPI, "The Federal Reserve will raise interest rates by 75 basis points next week, and the interest rate will reach more than 3%. But core inflation will stabilize near the wrong level. If the inflation rate in the next three to four months is around 0.3%, then the Fed's work has not been completed and the Fed will have to continue. We don't know how far the Fed will go further, or when it will be enough."
More than Hu holds this view. Robert Conzo, CEO and managing director of The Wealth Alliance in Melville in New York, also noted that while he believes CPI is on a downward trend, the extent to which this happens and how sticky inflation may remain remains unknown. He said in an email that once these trends become more obvious, it will provide the Fed with a firm direction.
This article is from Cailianshe
