That Consumer Price Index (CPI) Data for September will be released October 13 from the US Bureau of Labor Statistics. Analyst at JPMorgan Chase & Co and former US Treasury Secretary Larry Summers weighing what is happening and what could happen.
Why it matters: This CPI release will be a major catalyst for the Nov. 2 Fed meeting as 75 basis points the consensus is after last two Fed meetings.
JPMorgan forecast: According to JPMorgan, the market expects the headline CPI to come in at 8.1% ahead of August’s 8.3% reading and the core CPI to come in at 6.5% compared to 6.3% in the previous month.
JPMorgan’s 2022 inflation forecast calls for headline inflation of 7.1% for the November reading and 6.4% for the December release.
After Friday’s nonfarm payrolls came in above expectations, it raised further concerns that the Fed will remain hawkish for longer.
On the bearish note that the S&P 500 could hit 3,300 by the end of October, JPMorgan reported that the market was seeing a combination of a higher CPI, poor third-quarter earnings and a shock to oil prices such as the 2% cut in production from the OPEC+ would require millions of barrels per day.
In the bad earnings scenario leading to earnings revisions, analysts at JPMorgan mentioned the bank sector would have to miss expectations and issue lower guidance with a precarious view of consumer and financial conditions.
Analyzing the S&P 500’s bullish move back to 4,000, investors should expect CPI weakening and rising earnings surprises in the financial and consumer sectors, JPMorgan reported.
Analysts commented that CPI print would need to be below 7.8% for markets to rally, which could provide more dovish surprises despite allowing the Fed to hike rates 75 basis points to 100 in November to raise base points.
Rents were the only segment that JPMorgan expected to remain tight as it forecast tenant rents to rise 0.72% in September, while owner-equivalent…
