PREVIEW: US CPI data will be released on Tuesday, February 14th at 08.30EST/13:30GMT; JPM's base case is for 6.0-6.3%, which would result in a risk rally, the bank says

EXPECTATIONS: The consensus looks for headline CPI to rise +0.5% M/M in January (prev. -0.1%), though the annual measure is seen paring back to 6.2% Y/Y from 6.5%. The core measure is seen rising 0.4% M/M in January, matching the rate seen in December, while the annual core measure is expected to ease to 5.5% Y/Y from 5.7%.

DRIVING THE DATA: The CPI will be underpinned by a small rise in energy prices and persistent strength in food inflation, Credit Suisse says, though the sharp fall in used vehicle prices seen in recent months is unlikely to persist. CS says goods prices continue to face headwinds, but the pace of decline is likely to moderate; services inflation will continue to be supported by shelter, which the bank sees remaining elevated for at least a few months before decelerating in H2. CS says that if the market consensus is realised it would be consistent with inflation eventually returning to 2%, "but any reacceleration in the monthly run rate for core CPI would be an unwelcome development for the FOMC," adding that "combined with January’s strong employment report, this would likely keep Fed rhetoric hawkish, emphasising the need for ongoing rate hikes and a low probability of a pivot toward easing this year."

TRADING SCENARIOS (VIA JPMORGAN):

13 Feb 2023 - 11:55- EquitiesData- Source: Newswires

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