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Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
Executive Summary
- Consensus sees core CPI at 0.2% M/M in July after the far softer than expected 0.065% M/M in June, with a mild skew towards a “low” 0.2% per MNI’s compilation of sell-side previews.
- The main two dovish takeaways from the June report were from housing and non-housing aspects of core services, although the latter was aided by some non-PCE relevant categories.
- For July, analysts look for only a partial reacceleration in the key housing series to a rate still comparable with pre-pandemic averages.
- They also look for a more pronounced bounce in non-housing core services (aka “supercore”) to a still not-troubling 0.2% M/M. The market impact here will depend on specific drivers though, especially with PPI inflation unusually released before CPI this week.
- Market rate cut expectations have surged since the surprisingly weak July payrolls report, especially after the subsequent slide in global equity indices.
- There has since been some calm restored although there is still circa 40bp of cuts priced to start the easing cycle with the September.
- We feel that it will take further downside surprises to move away from a base case of the Fed cutting in 25bp clips. With August reports still to be seen for both payrolls and CPI before the Sept 18 FOMC decision, it will likely take a particularly dovish report this week for Chair Powell to have confidence to guide towards a 50bp cut at the upcoming Jackson Hole Symposium on Aug 22-24.
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Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
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