MACRO ANALYSIS: MNI US Macro Weekly: Fed Divided As Data Trickles Back In

Goldman Sachs are at the dovish end unrounded analyst estimates we've seen for monthly CPI inflation in Friday's September release, eyeing core CPI at 0.25% M/M after the 0.35% M/M in August and headline CPI at 0.33% M/M. We judge the median unrounded analyst estimate to be at 0.32% M/M for core CPI, with a range of 0.25-0.36%. 

• Four key component-level trends Goldman expect to see in this report:
  • “unchanged used car prices, reflecting the signal from auction prices, and a modest increase in new car prices, reflecting downward pressure on consumer prices from increased dealer incentives.”
  • “a 0.3% increase in the car insurance category based on premiums in our online dataset.”
  • “a 1.5% decline in airfares in September, reflecting a fading boost from seasonal distortions and a decline in underlying airfares based on our equity analysts’ tracking of online price data.”
  • “upward pressure from tariffs on categories that are particularly exposed, such as communication, household furnishings, and recreation, worth +0.07pp on core inflation.”
• “Over the subsequent few months, we expect tariffs to continue to boost monthly inflation and forecast monthly core CPI inflation of around 0.2-0.3%. Aside from tariff effects, we expect underlying trend inflation to fall further, reflecting shrinking contributions from the housing rental and labor markets.” They see core CPI at 3.1% Y/Y in Dec 2025 and core PCE at 3.0% Y/Y (or 2.2% for both excluding tariff effects). 

• Treasuries look to finish modestly higher Wednesday, reversing midmorning losses after Reuters reported the Trump admin "is considering broad restrictions of exports to China made with US software, citing an unnamed US official and three people briefed by US authorities."
• No noticeable reaction in rates after late Bbg headline: "US TO ANNOUNCE 'PICK UP' IN RUSSIA SANCTIONS TODAY OR TOMORROW".
• Treasury futures gain slightly (TYZ5 113-24 +0.0) after $13B 20Y Bond auction re-open (912810UN6) stopped through - drawing a high yield of 4.506% vs 4.517% WI at the cutoff; 2.73x bid-to-cover vs. 2.74x prior.
• The Wall Street Journal reports citing sources that the ADP has stopped providing the Fed with weekly data on private payrolls and earnings. Per the WSJ piece, the Fed has had access to the data since "at least 2018", and was available to the Fed with "a roughly one-week delay". The publicly-available ADP payrolls report is published monthly.
• Equity earnings expected to release after the close include Southwest Airlines, Raymond James, Churchill Downs, Alcoa, Crown Castle, United Rental, Lam Research, Tesla and IBM.
• Thursday's weekly Jobless Claims & Chicago Fed data suspended.

• RES 4: 0.6726 1.236 proj of the Jun 23 - Jul 24 - Aug 21 price swing
• RES 3: 0.6660/6707 High Sep 18 / 17 and a bull trigger
• RES 2: 0.6629 High Sep 30 & Oct 01 and key short-term resistance
• RES 1: 0.6545 50-day EMA
• PRICE: 0.6505 @ 15:38 BST Oct 22
• SUP 1: 0.6440 Low Oct 14
• SUP 2: 0.6415 Low Aug 21 / 22 and a bear trigger
• SUP 3: 0.6373 Low Jun 23
• SUP 4: 0.6357 Low May 12  

AUDUSD remains in consolidation mode. Price action on Oct 14 continues to highlight a possible reversal pattern - a hammer candle. It signals the end of the bear cycle that started Sep 17. Note that MA studies have remained in a bull-mode position during the latest bear leg, highlighting a dominant M/T uptrend. Initial resistance is 0.6545, the 50-day EMA. A breach of 0.6440, the Oct 14 low, would cancel the reversal pattern and reinstate a bear threat.