CPI Showdown: December Inflation May See "Reflationary Rebound," Extreme Value Risk Alert
BlockBeats News, January 12th, the market generally expects that the December US CPI may experience a temporary rebound (data will be released this Tuesday at 21:30), mainly due to the statistical repair effect after the normalization of the Labor Statistics Bureau's survey, and does not necessarily mean a structural deterioration of inflation.
November non-farm payroll and CPI were announced close in time. The non-farm data shows that the US labor market continues to cool, with the unemployment rate rising to 4.6% (rounded to 4.573% before rounding), the highest level in nearly four years. However, affected by the aftermath of the government shutdown, the reliability of the data has been questioned, failing to significantly strengthen the market's expectation of an early rate cut by the Federal Reserve.
Interest rate futures show that the market generally expects that the January meeting will keep interest rates unchanged, and the first rate cut may occur in March, April, or June, but none has formed a consensus pricing of over 50%, showing a high degree of uncertainty in the path. The mainstream expectations for this CPI are as follows:
Overall CPI YoY: a slight increase from 3.0% to 3.1%
Core CPI YoY: maintained at 3.0%
Three scenario scenarios:
1. Meeting expectations: limited impact on risk assets, market focuses on key technical reactions.
2. Significantly above expectations (especially core CPI): concerns about inflation stickiness intensify, which may temporarily suppress risk appetite.
3. Unexpected significant decline (low probability): may resonate with weakening employment, strengthen easing expectations, bullish for risk assets.
The December CPI may become a short-term market volatility amplifier, and it is necessary to focus on preventing the impact of "extreme readings" on interest rate expectations and asset pricing.
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