September CPI Preview: Tonight at 20:30, September CPI is released
Headline year-over-year inflation is expected to rise from 3.4% to 3.6%–3.7%, while core month-over-month inflation is expected to fall from 0.3% to 0.2%. The surge in inflation is entirely thanks to gasoline. Fed rate-hike pricing now puts the odds of no change in October at 77.3%, and the probability of a cumulative 25 bp hike by December at 68.7%.
The 10-year Treasury yield is 5.22%: the real yield is 2.92%, its highest since November 2008; the breakeven inflation rate is 2.33%. The market simply doesn’t believe inflation is out of control.
Brent crude is at 106.6 and WTI at 95.3. Pricing power lies with the Strait of Hormuz and Riyadh. Crude has been volatile for a long time, with oil prices historically trading between 40 and 70 as a commodity. Global commercial onshore inventories have fallen below 6 billion barrels, and oil prices must come down before the midterm elections.
One final counterintuitive point: the lower CPI is, the more bearish it is for crude in the medium term. The fact that core inflation isn’t passing through at all shows that demand is already too weak for it to do so. OPEC has cut its forecast for this year’s demand growth six times in a row, from 1.4 million barrels per day at the start of the year to 180,000 barrels per day. That’s the evidence.
#9月CPI来袭原油美债走势如何
Headline year-over-year inflation is expected to rise from 3.4% to 3.6%–3.7%, while core month-over-month inflation is expected to fall from 0.3% to 0.2%. The surge in inflation is entirely thanks to gasoline. Fed rate-hike pricing now puts the odds of no change in October at 77.3%, and the probability of a cumulative 25 bp hike by December at 68.7%.
The 10-year Treasury yield is 5.22%: the real yield is 2.92%, its highest since November 2008; the breakeven inflation rate is 2.33%. The market simply doesn’t believe inflation is out of control.
Brent crude is at 106.6 and WTI at 95.3. Pricing power lies with the Strait of Hormuz and Riyadh. Crude has been volatile for a long time, with oil prices historically trading between 40 and 70 as a commodity. Global commercial onshore inventories have fallen below 6 billion barrels, and oil prices must come down before the midterm elections.
One final counterintuitive point: the lower CPI is, the more bearish it is for crude in the medium term. The fact that core inflation isn’t passing through at all shows that demand is already too weak for it to do so. OPEC has cut its forecast for this year’s demand growth six times in a row, from 1.4 million barrels per day at the start of the year to 180,000 barrels per day. That’s the evidence.
#9月CPI来袭原油美债走势如何