MNI US Inflation Insight: Terminal Rate Soars On Twin-Pronged Acceleration

EXECUTIVE SUMMARY

• Core CPI inflation sharply unwound hopes of cooling price pressures with a two-pronged acceleration in goods (limited sign of impact from supply chain easing) and services (both sticky and wage-sensitive alike).
• The market priced more than 80bps for next week’s FOMC expected hike whilst terminal rate expectations surged more than 30bps above 4.30%. Analysts revised up rate paths for Nov and beyond with a 75bp hike next week seen as locked in, aside from Nomura calling for a 100bp hike.
• Particularly noteworthy releases of retail sales and U.Mich survey before Sep 21, with attention on media outlets with the FOMC in blackout after a similar situation with WSJ guidance ahead of the June FOMC.

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USInflationInsightSep2022.pdf