US DATA: Core PCE Estimates Still Likely Near 0.22% M/M For Friday’s Sept Report
Dec-03 17:27
- Within the import price data, air passenger fares increased a non-seasonally adjusted 14.0% M/M in September.
- That repeats the 13.9% in Sep 2024 but is strong compared to the 6.4% M/M averaged in the prior three years, leaving a reasonable seasonally adjusted increase.
- On its own, we estimate it could be worth 1-2bp for core PCE but its impact on tracking will clearly depend on what analysts had already pencilled in.
- For instance, Morgan Stanley have lowered their core PCE inflation estimate 1bp to 0.22% M/M as they estimate airfares increased 2.6% M/M after their own seasonal adjustment vs an estimated 3.2% M/M.
- We don’t imagine today’s release will have materially changed analyst estimates for Friday’s core PCE release, seen at a median 0.22% M/M after last week’s PPI report. MS had been at the higher end of a narrow range of 0.20-0.23% we’d seen after PPI.
- This follows 0.23% M/M in Aug and 0.24% M/M with MS previously seeing scope for a +1bp revision to Aug and +1.5bp for Jul.
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FOREX: CHF Consolidates at Weaker Levels Following Below-Expectation CPI Data
Nov-03 17:21
- Softer-than-expected CPI data in Switzerland this morning has resulted in the Swiss Franc being the weakest currency across the G10 today. While currency markets have adjusted in sympathy to the data, it is worth highlighting the bar to an SNB move back into negative rates territory remains high in the short-term. Indeed, SNB's Tschudin said last week that it is ok if inflation moves below 0% for a "short time".
- EURCHF (+0.28%) held a significant medium-term support last week, and spot is now operating roughly 100 pips above the key 0.9206 level. A break back above 50-day EMA resistance at 0.9308 would be a bullish development, likely allowing the cross to re-establish the 0.93-0.94 range that was broadly in place between May/September.
- Goldman Sachs acknowledged the data has helped EURCHF continue its recovery over the past two weeks back closer to their 3-month target of 0.9300. An element of mean reversion was likely at play in that recovery, after a notable move lower through most of October that was mostly unattached from cyclical fundamentals in their view.
- For USDCHF (+0.30%), a collection of daily highs have been broken today, assisting the pair to two-month highs above 0.8075. Should the post-FOMC greenback recovery continue to gather momentum, the most obvious target for the move is 0.8171, the August 01 high.
SONIA OPTIONS: Z5/Z6 Bull Flattener
Nov-03 17:13
- +5k 0NZ5 96.70/96.90 cs vs -5k SFIZ5 96.35/96.50 cs
- ppr pays 3.75 to Buy the 0NZ5 cs
OPTIONS: Larger FX Option Pipeline
Nov-03 16:55
- EUR/USD: Nov05 $1.1600-20(E1.4bln); Nov06 $1.1400(E1.4bln), $1.1500(E1.5bln), $1.1550(E1.2bln), $1.1600(E1.4bln), $1.1715(E1.5bln)
- USD/JPY: Nov06 Y152.00($1.0bln), Y153.00-05($1.1bln), Y154.00-05($1.1bln), Y154.50-55($1.1bln), Y155.00($1.7bln), Y155.35($1.2bln)
- NZD/USD: Nov05 $0.5650(N$1.1bln), $0.5675(N$1.0bln)
- USD/CAD: Nov07 C$1.3900($2.3bln)
