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What to Watch: Nov CPI Precursor to Wednesday's PPI, FOMC Rate Annc

US TSYS
  • Morning focus on November CPI data at 0830ET while Tsy futures trade stronger, nearing pre-NFP levels with TYH4 tapping 110-22 recently (10YY 4.1834% low).
  • Consensus puts core CPI inflation at 0.3% M/M in November, reaccelerating to 0.3% after a surprise moderation to 0.23% M/M in October. Both the Bloomberg survey and the analysts covered below imply downside skew.
  • Upside drivers are seen in volatile items with lodging away from home in particular pulling back after surprise weakness, whilst used cars should add to the upside. Primary rents meanwhile are likely a modest drag.
  • Meanwhile, US Tsy $70B 42D bill CMB auction scheduled at 1130ET, $21B 30Y Bond auction re-open (912810TV0) at 1300ET.
  • Look ahead: PPI data for November tomorrow morning followed by the FOMC rate annc at 1300ET - includes Summary of Economic Projections, followed by Chairman Powell presser at 1430ET.
  • The Fed will likely lower its median "dot plot" estimate for policy interest rates at the end of 2024 to around 4.9%, former officials and staffers told MNI, as expectations build for the first rate cut to come as early as the first half of the year.
  • "My expectation is that the median will probably show two 25-basis-point cuts next year," said ex-Boston Fed chief Eric Rosengren, whose own forecast is for two to three cuts starting as early as the second quarter.
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