PREVIEW: US CPI to be released Wednesday at 13:30BST/08:30EDT; analysts expect Y/Y rate to ease a little

• The street expects US CPI to rise +0.5% M/M in July, and the annual rate to pare back by 0.1ppts to 5.3% Y/Y. The core CPI metric is forecast to rise +0.4% M/M, though the annual rate is seen easing by 0.2ppts to 4.3% Y/Y.


• UBS' big data analytics flags the possibility of upside to the consensus, noting that food, energy, and core prices all continued higher in the month. The bank is however expecting core goods prices (ex-apparel and transport) to begin falling in the autumn after notable strength in recent years. "We have seen some initial signs of a weakening of supply drivers of inflation in the ISM (lower delivery time and prices paid indexes) and demand drivers in the PCE data (lower share of core goods in consumption spending), but our guess is that the June slowdown was a blip and we are still a few months away from a sustained weakening," the bank wrote.


• Fed officials' base case still frames inflation upside as transitory, although key policymakers have been hedging themselves a little; last week, for instance, Fed Vice Chair Clarida said that if core inflation rose to 3.0% this year, as he expected, he would consider that 'much more' than a moderate overshoot of the Fed's inflation goal; those comments followed Fed Chair Powell’s post FOMC remarks, where he said that price pressures would remain elevated in coming months before moderating, but he added that inflation could turn out to be higher and more persistent than expected.


• Ahead, UBS is above consensus on the inflation profile in the near-term but sees some slowing later this year: "Our inflation forecast remains on the high side of the Bloomberg consensus and the Fed this year, but falls below them next year -- the difference appears to be that we expect stronger inflation over the next few months, but then a greater slowing after the summer as the forces pushing up inflation start to push down inflation."

11 Aug 2021 - 11:54- Fixed IncomeData- Source: Newsquawk