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MNI US CPI Preview: Watch Services For Terminal Implications


  • Released Sep 13 0830ET, the August CPI print is expected to see similar sequential figures as July, with a second month of core at a ‘lower’ 0.3% M/M (0.31% in July) and headline at -0.1% M/M (-0.02%) after another drag from energy.
  • It will take a sizeable miss to knock the FOMC off an almost fully priced 75bp hike next week, especially after VC Brainard said last week she wants to see “several” months of lower inflation before Waller upped it with wanting to see a permanent, longer-term decline having been burned by last year’s apparent easing.
  • Risk of potentially larger reaction in the event of a miss after last week's Fed push of higher rates for longer saw an implied terminal Fed Funds effective rate briefly north of 4% and 2Y Ts yields hit fresh post-2007 highs, but there is scope for sizeable moves in either direction.



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