#CPIWatch September CPI drops tomorrow (Oct 14, 8:30 a.m. ET). Markets already expect a hotter headline print, mostly because energy prices jumped hard last month.
Brent settled near $106.65 on Monday — highest close since mid-September — after Houthi strikes hit Riyadh’s airport and tankers near Hormuz. Gasoline in the US had already pushed toward $4.50 in late September. That’s the main reason economists see headline CPI up around 0.5–0.6% month-on-month, the biggest jump in five months, lifting the year-over-year rate toward 3.6% from 3.4%. Core is still expected to cool to about 0.2% month-on-month and hold near 2.4% year-over-year.
I’m not betting on a big upside surprise beyond what’s already priced. The oil spike is real and visible. The question is whether it sticks long enough to force another Fed hike this year. The Fed already raised rates in September to 3.75–4.00%, the first hike since 2023. Ten-year yields are sitting near 5.25–5.30%. A hot headline print would probably keep rate-hike bets alive and put more upward pressure on yields in the short term. A softer core number would give the Fed room to skip October and wait for December.
On oil, the risk premium is still there. Attacks on Saudi infrastructure and Hormuz traffic keep a floor under prices even if Russian diesel supplies increase. I don’t see Brent collapsing below $100 quickly unless the conflict cools fast. But I’m also not chasing new highs here — the move has already been large.
How I’m thinking about positions:
• Small long bias on oil via $BZ if I get a dip after the print and the conflict stays hot.
• For Treasuries, I’m more cautious on the long end. A hot headline keeps pressure on yields, so $TBT (or similar short exposure) makes more sense to me than loading up on $TMF right now.
• I’m watching the core number more than the headline. If core stays soft, the hike odds should ease and long bonds could stabilize.
#BTCDominanceBackAt60%
Brent settled near $106.65 on Monday — highest close since mid-September — after Houthi strikes hit Riyadh’s airport and tankers near Hormuz. Gasoline in the US had already pushed toward $4.50 in late September. That’s the main reason economists see headline CPI up around 0.5–0.6% month-on-month, the biggest jump in five months, lifting the year-over-year rate toward 3.6% from 3.4%. Core is still expected to cool to about 0.2% month-on-month and hold near 2.4% year-over-year.
I’m not betting on a big upside surprise beyond what’s already priced. The oil spike is real and visible. The question is whether it sticks long enough to force another Fed hike this year. The Fed already raised rates in September to 3.75–4.00%, the first hike since 2023. Ten-year yields are sitting near 5.25–5.30%. A hot headline print would probably keep rate-hike bets alive and put more upward pressure on yields in the short term. A softer core number would give the Fed room to skip October and wait for December.
On oil, the risk premium is still there. Attacks on Saudi infrastructure and Hormuz traffic keep a floor under prices even if Russian diesel supplies increase. I don’t see Brent collapsing below $100 quickly unless the conflict cools fast. But I’m also not chasing new highs here — the move has already been large.
How I’m thinking about positions:
• Small long bias on oil via $BZ if I get a dip after the print and the conflict stays hot.
• For Treasuries, I’m more cautious on the long end. A hot headline keeps pressure on yields, so $TBT (or similar short exposure) makes more sense to me than loading up on $TMF right now.
• I’m watching the core number more than the headline. If core stays soft, the hike odds should ease and long bonds could stabilize.
#BTCDominanceBackAt60%
