Deutsche Bank: Upside Core CPI Risks

Deutsche is above-consensus on today's inflation report, saying this week's CPI and PPI reports "will certainly be well scrutinized for signals that the economic data could push the Fed to talk about tapering sooner rather than later."

• Deutsche sees headline CPI of +0.30% unrounded / core +0.39%, with PPI headline +0.2%/ core +0.3%, implying they are looking for an above-consensus core CPI figure and in-line on PPI. Current BBG consensus for PPI core is +0.4%, with CPI core +0.3%.
• They note that the March CPI report was "one-sided" with "the vast majority of surprises at the component level" to the upside, which normally would persuade Deutsche to moderate its expectations lower, but they note "those upside surprises seemed to occur in categories related to reopening, particularly where demand may be coming back somewhat faster than supply" so may persist.