September CPI is out tonight: don’t chase oil; watch core for Treasuries
Tonight’s September CPI is unlikely to come in much higher than expected overall. Gasoline pushing the monthly increase to around 0.6% is already priced in; the real switch is core monthly inflation.
The market expects core inflation at 0.22%, with estimates ranging from 0.16% to 0.24%—there’s no consensus.
If core comes in below 0.18%, Treasury yields should fall first, with the 10-year moving back from around 5.19% toward 5.05%;
if core hits 0.24% or higher, expectations of a Fed rate hike in October will reignite, sending the 10-year yield toward 5.3%.
I’m bullish on oil, but don’t chase it.
Brent rose about 42% in the third quarter, and WTI settled at 94.14. Geopolitical risks haven’t faded since the Houthis struck Saudi Aramco’s headquarters.
September’s average gasoline price of $4.30 per gallon set a monthly record, and oil costs are already reflected in headline CPI.
Tonight’s data are unlikely to give crude another boost unless core inflation is high enough to force the Fed to keep tightening—in which case expectations for demand would be dampened.
Don’t add to crude longs before the data release; Treasury shorts should wait for the core figure.
If core is below 0.22%, I’ll trim my Treasury shorts. As long as oil stays above 92.5, I’ll continue to expect it to grind at elevated levels.
If core is above 0.24%, I’ll add to shorts only if the 10-year yield rises above 5.28%; I’ll keep my oil position too.
If oil falls below 92.5, the geopolitical premium is unwinding and the bullish oil thesis is invalidated. I’ll admit my bearish Treasury view is wrong if core is 0.16% and the 10-year yield falls below 5.05%.
#9月CPI来袭原油美债走势如何 #原油 #美债收益率
Tonight’s September CPI is unlikely to come in much higher than expected overall. Gasoline pushing the monthly increase to around 0.6% is already priced in; the real switch is core monthly inflation.
The market expects core inflation at 0.22%, with estimates ranging from 0.16% to 0.24%—there’s no consensus.
If core comes in below 0.18%, Treasury yields should fall first, with the 10-year moving back from around 5.19% toward 5.05%;
if core hits 0.24% or higher, expectations of a Fed rate hike in October will reignite, sending the 10-year yield toward 5.3%.
I’m bullish on oil, but don’t chase it.
Brent rose about 42% in the third quarter, and WTI settled at 94.14. Geopolitical risks haven’t faded since the Houthis struck Saudi Aramco’s headquarters.
September’s average gasoline price of $4.30 per gallon set a monthly record, and oil costs are already reflected in headline CPI.
Tonight’s data are unlikely to give crude another boost unless core inflation is high enough to force the Fed to keep tightening—in which case expectations for demand would be dampened.
Don’t add to crude longs before the data release; Treasury shorts should wait for the core figure.
If core is below 0.22%, I’ll trim my Treasury shorts. As long as oil stays above 92.5, I’ll continue to expect it to grind at elevated levels.
If core is above 0.24%, I’ll add to shorts only if the 10-year yield rises above 5.28%; I’ll keep my oil position too.
If oil falls below 92.5, the geopolitical premium is unwinding and the bullish oil thesis is invalidated. I’ll admit my bearish Treasury view is wrong if core is 0.16% and the 10-year yield falls below 5.05%.
#9月CPI来袭原油美债走势如何 #原油 #美债收益率