MNI US CPI Preview: Core CPI Seen Similar To June On Two-Sided Familiar Drivers

EXECUTIVE SUMMARY

• Consensus puts core CPI inflation at 0.2% M/M in July in what’s likely only a minor uptick from the unrounded 0.16% M/M in June.
• Analysts see two conflicting (and familiar) drivers on the month: airfares (upside) and used cars (downside).
• Some expect the Fed’s closely watched core services ex housing measures to firm from particularly weak flat or near flat readings in June but to still help the trend moderate.
• The market remains sceptical of additional hikes from here, pricing just 8bp of cumulative tightening with the November meeting. NY Fed’s Williams and Philly Fed’s Harker have this week talked on 2024 rate cuts and there is more than 140bps of cuts priced for 2024. We suspect reaction is skewed larger in the event of a miss.
• There is still core PCE for July (Aug 31) and another round of both payrolls and CPI reports before the next FOMC decision on Sep 20.

PLEASE FIND THE FULL REPORT HERE:

USCPIPrevAug2023.pdf