US OUTLOOK/OPINION: Barclays At Top End Of Consensus For CPI
Barclays sit at the top end of unrounded analyst estimates we've seen for Friday's September CPI release, with core CPI seen at 0.36% M/M and headline at 0.43% M/M. As headlined in an earlier bullet, Goldman form the lower end of this unrounded estimate range with 0.25% M/M. Barclays expect similar strength through to Jan 2026 on elevated tariff pass-through.
- “September data quality should remain unaffected since collection finished before the shutdown, but prolonged closures may affect October data collection and quality.”
- “We expect the uptick to be led entirely by core goods prices, which we forecast at +0.4% m/m amid more tariff pass-through. If realized, this would mark the highest core goods inflation print since May 2023. We estimate that core services inflation eased to 0.3% m/m, amid less shelter inflation”.
- They eye 0.31% M/M for core PCE inflation, 9bp higher than August.
- “We expect fairly stable but elevated tariff pass-through in the coming months to keep core CPI rounding to 0.4% m/m through January 2026. While tariff pressures have been slow to materialize, they are catching up with the 2018-19 experience, and about 40% of the expected tariff-related price increases have materialized thus far.” They see core CPI at 3.5% Y/Y in Dec 2025 and 2.7% Y/Y in Dec 2026.
- They continue to see a 25bp cut in October before one more in December. “The trickle of pre-shutdown data releases and private data suggest more of the same for the labor market and spending.”
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Historical bullets
USDCAD TECHS: Remains Above Support For Now
- RES 4: 1.4019 38.2% retracement of the Feb 3 - Jun 16 bear leg
- RES 3: 1.3925 High Aug 22 and the bull trigger
- RES 2: 1.3890 High Sep 11
- RES 1: 1.3848 High Sep 15
- PRICE: 1.3817 @ 19:32 BST Sep 22
- SUP 1: 1.3727 Low Aug 29 and a bear trigger
- SUP 2: 1.3709 61.8% retracement of the Jul 23 - Aug 22 bull cycle
- SUP 3: 1.3658 76.4% retracement of the Jul 23 - Aug 22 bull cycle
- SUP 4: 1.3637 Low Jul 25
A sharp sell-off in USDCAD early last week resulted in a break of the 20-and-50-day EMAs. This undermines a recent bullish theme and exposes key short-term support at 1.3727, the Aug 27 low. A clear break of this level would strengthen a bearish threat and signal scope for a deeper retracement. For bulls, resistance levels to watch are; 1.3890, the Sep 11 high, and 1.3925, the Aug 22 high and bull trigger.
US TSYS: Fed Speakers: Difference of Opinions
- Treasuries reversed early support after comments from Fed Bostic: sees little reason for additional rate cuts "for now", labor market "not in crisis": "forecasting is really hard these days and so I still have one cut down for the year. So that would be it."
- StL Fed Musalem: "I believe there is limited room for easing further without policy becoming overly accommodative, and we should tread cautiously," Musalem said in prepared remarks for an event at the Brookings Institution.
- Conversely, new Fed Governor Miran (Mr. Low Dot) unsurprisingly argues for significantly lower policy interest rates (2-2.5% "ballpark) in his first prepared remarks since being appointed to the Board, calling current rates "very restrictive".
- Projected rate cut pricing cooled slightly vs. early morning levels (*): Oct'25 at -22.3bp (-22.9bp), Dec'25 at -43.1bp (-44.6bp), Jan'26 at -54.1bp (-56.2bp), Mar'26 at -66bp (-69.1bp).
- Currently, the Dec'25 10Y trades -2.5 at 112-21.5 (yld 4.1467% +.0193) vs. 112-21.5 low, modest volumes (TYZ5 1.03M); technical resistance well above at 113-29 (High Sep 11 and the bull trigger); Support at 112-15+ (High Aug 5 and 14). Curves mixed: 2s10s -1.430 at 53.948, 5s30s +0.067 at 106.406.
- Look ahead to Tuesday's session: S&P Global flash PMIs, Current Account Balance and regional Fed data. Fed Chair Powell speaks about the economy at 1235ET after Bowman's outlook (0900ET) and Bostic podcast (1000ET).
JGB TECHS: (Z5) Bearish Trend Sequence
- RES 3: 140.08 High Jun 13
- RES 2: 139.05 High Aug 4
- RES 1: 137.30 - High Sep 8 asnd key short-term resistance
- PRICE: 135.97 @ 19:08 BST Sep 22
- SUP 1: 135.76 - Low Sep 22
- SUP 2: 135.39 - 1.618 proj of the Aug 4 - Sep 2 - Sep 8 price swing
- SUP 3: 134.69 - 2.000 proj of the Aug 4 - Sep 2 - Sep 8 price swing
A bear threat in JGB futures remains present and the contract has pulled back from its recent highs. The latest sell-off has also resulted in a break of support at 136.19, the Sep 4 low and a bear trigger. Clearance of this level confirms a resumption of the downtrend and opens 135.39 next, a Fibonacci projection. Key short-term resistance has been defined at 137.30, the Sep 8 high.
