Trading charts for Tuesday, February 14th
Good morning and Happy Tuesday,
Today is CPI day which means we get the January CPI numbers at 8:30am EST so I’m not going to do my usual 10-20 charts since everything could change for better or worse at 8:30am.
Futures are looking decent as of 6:15am but based on whether CPI comes in hot or cold we could see the index up/down 2% today.
Here are the estimates for CPI today (YoY and MoM):
CPI guesses YoY:
JPMorgan 6.4%
Morgan Stanley 6.4%
Goldman 6.4%
Nomura 6.3%
Citi 6.3%
UBS 6.3%
BNP Paribas 6.2%
Barclays 6.2%
Credit Suisse 6.2%
HSBC 6.2%
Jefferies 6.2%
TD 6.2%
Wells Fargo 6.2%
BofA 6.1%
CapEcon 6.1%
StanChart 6.1%
Core guesses MoM:
Goldman 0.5%
JPMorgan 0.5%
Citi 0.4%
Morgan Stanley 0.4%
Nomura 0.4%
BNP Paribas 0.4%
Barclays 0.4%
Credit Suisse 0.4%
Deutsche Bank 0.4%
Jefferies 0.4%
TD 0.4%
BofA 0.3%
HSBC 0.3%
UBS 0.3%
Wells Fargo 0.3%
As I mentioned yesterday, BLS recently changed the CPI composite for 2023 which is why the January number is expected to be in the +0.4% to +0.5% range versus the recent trend of +0.1% to +0.2%
Before this change in the CPI composite I thought we had a good chance of getting CPI down to 2-3% YoY by the FOMC meeting in May but now I think that’s less likely. Now I think it could take until the July meeting to get CPI down to 2-3% YoY which means we’re more likely to get another 25 bps rate hike at the March 22nd meeting and another 25 bps at the May 3rd meeting — there is no April meeting. If CPI comes in cooler the next.
FWIW, the next two CPI reports after today are March 14th and April 12th which means we have three CPI reports (including today) before the FOMC meeting on May 3rd. The only way we don’t get that second 25 bps rate hike is if CPI comes in cooler the next three reports plus the monthly jobs report starts showing some weakness. Even if CPI is coming down, I don’t think the FOMC is willing to pause the rate hikes until CPI is under 3% YoY or they see weakness in the labor markets which probably means we need to see those monthly jobs numbers below +200,000. The next monthly jobs report is March 10th and then April 7th which means two more jobs reports before the FOMC meeting on May 3rd.