MNI US OPEN - US CPI to Shape Fed Tone on Rate Cuts
EXECUTIVE SUMMARY
- MNI US CPI PREVIEW - DATA TO SHAPE FED'S TONE ON RATE CUTS
- MNI ECB PREVIEW - GROWTH OUTLOOK WATCHED AMIDST DATA DEPENDENCE
- US DEFENSE TEAM HEADS TO INDIA AS LEADERS REVIVE TRADE TALKS
- CHINA MULLS HELPING LOCAL GOVERNMENTS WITH $1 TRILLION OF BILLS: BBG
Figure 1: Recent US inflation developments
NEWS
MNI US CPI PREVIEW: Data to Shape Fed's Tone on Rate Cuts
Consensus (Bloomberg median) is for core CPI to come in at 0.3% M/M rounded in August, same as July, with the MNI unrounded median looking for 0.32% with a slight lean in the risks toward a rounding-up to 0.4%. Recall that the July CPI report saw further acceleration in monthly core inflation but the details defied expectations. The rise was driven by volatile services categories and - in a counter-intuitive finding amid continued tariff concerns - core goods were surprisingly soft (and inflation breadth appeared to moderate).
MNI ECB PREVIEW: Growth Outlook Watched Amidst Data Dependence
The ECB is fully expected to leave its three key rates on hold on Thursday, with its deposit rate at 2.00%. ECB President Lagarde is expected to continue to suggest policy is in a good place. A data-dependent and meeting-by-meeting approach is expected to be reiterated in a continuation of July’s “deliberatively uninformative” communication approach around future rate decisions.
Hidden PDF: Highlighting Key Longer-Term Trends
We introduce the MNI Tech Trend Monitor - This document highlights a selection of key longer-term trends that we have identified in markets that could be reaching inflection points, trend reversals/extensions or technically significant levels. Covering: UK Gilt 10y Yield, UK Gilt 30y Yield, ICE USD Index, Europe Banking Stock Index (SX7E).
US/INDIA (BBG): US Defense Team Heads to India as Leaders Revive Trade Talks
A team from the US Defense Department and Boeing Co. executives are expected to visit India next week to negotiate the sale of about $4 billion of surveillance aircraft, officials in New Delhi said, as the two countries seek to revive trade talks. India will discuss the purchase of six P-8I naval patrol aircraft, the people said, asking not to be identified because the discussions are private. The procurement deal was cleared in 2019 but negotiations had subsequently stalled, they said.
GERMANY (MNI): Health Insurances Plan to Sue Federal Govt for E10bln/Year - Bild
The National Association of Statutory Health Insurance Funds is planning to sue the Federal Republic of Germany for around E10bln/year due to a claimed state underfunding of health insurance contributions for citizens receiving basic income support according to newspaper Bild. A passing of the legal action could intensify German budget discussions against the backdrop of a E30+bln "financing gap" in the 2027 federal budget.
CHINA (MNI EXCLUSIVE): PBOC to Continue Gold Buying as Dollar Hedge
MNI discusses the PBOC's gold-buying strategy. On MNI Policy MainWire now, for more details please contact sales@marketnews.com
CHINA (BBG): China Mulls Helping Local Governments With $1 Trillion of Bills
China is preparing to tackle the significant backlog of unpaid bills owed by local governments to the private sector, according to people familiar with the matter, an amount of arrears some have estimated at over $1 trillion. The government is considering asking state lenders and policy banks including China Development Bank to lend to local authorities so they can make the payments in arrears, the people said, asking not to be named because the matter is private.
BOJ (RTRS): BOJ Signals Final Phase of Ueda’s Stimulus Unwind - Selling ETFs
The Bank of Japan is firming up a strategy to unload its huge holdings of risky assets that will likely centre on a plan to gradually sell exchange-traded funds (ETF) in the market, said three sources familiar with its thinking. There is no consensus yet on when a decision about that would be made, the sources said, with the timing complicated in part by political turmoil caused by Prime Minister Shigeru Ishiba's resignation.
RBA (MNI EXCLUSIVE): Wages to Limit RBA Easing - Ex Research Chief
The head of the RBA’s economic research department from 2014 to 2024 discusses the rate outlook. On MNI Policy MainWire now, for more details please contact sales@marketnews.com
RBNZ (MNI): RBNZ Still Sees 2.5% OCR Trough Depending on Data
Governor Hawkesby noted at the Financial Services Council conference today that the economy has looked better in July and there are signs that growth will pick up in H2, as was expected. He also stuck with the August projection that the OCR will trough at 2.5% but said that "could occur faster or slower depending on how the economic recovery evolves", ie remains data dependent. The RBNZ expects Q2 GDP to fall 0.3% q/q (released September 18) but then recover to +0.3% in Q3 and +0.8% in Q4. 25bp rates cuts in October and November are expected.
Hidden PDF: A Slower Easing Pace
While the CBRT had been expected to continue with the 300bp easing pace established in July, the stronger-than-expected inflation data for August and recent political developments warrant a more cautious approach. The median expectation as per an analyst survey now looks for a 200bp cut to the one-week repo rate, which would take it to 41%. An even smaller rate cut is not ruled out, although a pause entirely appears highly unlikely at this stage.
INDIA (BBG): India Plans to Retain Market Borrowing Target After Tax Cuts
India plans to keep its borrowing program unchanged for the second half of the financial year and absorb any revenue losses from recent consumption tax cuts, according to people familiar with the matter. New Delhi won’t cut capital expenditure and remains on track to meet its fiscal deficit target of 4.4% of gross domestic product for the year ending March 2026, the people said, asking not to be identified as they aren’t authorized to speak publicly.
OIL (BBG): Record 2026 Oil Surplus Expands as OPEC+ Boosts Output, IEA Says
A record oil surplus projected for next year is looking even bigger as OPEC+ continues to revive production and the group’s rivals grow, the International Energy Agency said. While the IEA boosted estimates slightly for global oil demand this year and next, it raised supply projections even more. World output will exceed consumption by an average of 3.33 million barrels per day in 2026, about 360,000 a day more than anticipated a month ago, according to the agency’s report. It’s a historic overhang in annual terms, though the surplus was briefly bigger at the height of the 2020 pandemic.
DATA
SWEDEN DATA (MNI): Soft Seasonally Adjusted CPIF-Ex Energy Print in August
- SWEDEN FINAL AUG CPIF +3.2% Y/Y
- SWEDEN FINAL AUG CPIF EX-ENERGY +2.9% Y/Y
Our seasonal adjustment of CPIF-energy (using the X-13 methodology) indicates a 0.05% M/M SA rise in August, a solid unwind from 0.16% in July and 0.49% in June. Although this still meant 3m/3m inflation momentum ticked up to 3.04% (from 2.67% prior) in August, momentum should start to move lower again as the high June print moves into the denominator of the calculation. While various momentum measures still track above the 2% target on an annualised basis, there doesn't appear to be evidence of broader acceleration in inflationary pressures.
JAPAN DATA (MNI): Japan Aug CGPI Rises 2.7% Y/Y; Import Price Drops
- JAPAN AUG CORP GOODS PRICE INDEX +2.7% Y/Y; JULY +2.5%
Japan’s corporate goods price index rose 2.7% y/y in August, accelerating from July’s revised 2.5%, the Bank of Japan said Thursday, driven by beverages and foods (+5.0% vs +4.7%) and nonferrous metals (+6.2% vs +0.3%). On a monthly basis, CGPI fell 0.2% in August after a 0.3% gain in July, the first decline in two months. Import prices dropped 3.9% y/y in yen terms, extending their fall for a seventh straight month after July’s -10.3%, underscoring ongoing downward pressure.
JAPAN DATA (MNI): BSI Q3 Sentiment Index Rises, But Within 2025 Ranges
The Japan Q3 BSI large industry and large manufacturing sentiment readings rose for Q3. For all industry it printed at 4.7 from -1.9 in Q2, while for large manufacturing we got to 3.8 from -4.8 in Q2. For non-manufacturing firms we rose to 5.2 from -0.5. Smaller firms saw improvement on Q2 outcomes as well, but remain at lower aggregate reading levels relative to larger firms.
AUSTRALIA DATA (MNI): Inflation Expectations Unchanged in Q3 at 4.4%
Melbourne Institute consumer inflation expectations jumped back to 4.7% in September, in line with July, after moderating in August to 3.9%. Q3 averaged 4.4% unchanged from Q2, signalling no progress on this front with the series zigzagging sideways for over a year. While petrol prices declined in August and September, they were little changed on the quarter in Q3. The widely-reported July CPI jumped 0.9pp to 2.8% y/y with the trimmed mean up 0.6pp to 2.7%, which Westpac noted may have been driven consumer expectations for the economic outlook lower in September. However in terms of news recall in the survey, inflation was at its lowest level for four years.
FOREX: USD Firmer Into CPI, EUR Rangebound Pre-ECB
- The USD trades frirner against most others in G10 Thursday, helping keep most major pairs pinned to the post-PPI lows. GBP/USD is softer, putting the rate through yesterday's 1.3513 low, exposing 1.3468 - the 50-day EMA - as interim support. Newsflow has been few and far between after a busy start to the session Wednesday - with rumbling geopolitical risk still a fringe concern for now.
- JPY is the session's underperformer. The confirmation of Sanae Takaichi as in the running to replace Ishiba as LDP party head helped usher in some JPY weakness. Her outspoken pro-easing views have worked against the currency as they did during previous leadership races, keeping USD/JPY pinned higher toward the week's best levels. Resistance in the pair crosses at 148.06 initially, and into 148.47.
- The ECB rate decision takes focus going forward, at which markets expect no change in the policy rate set, with focus instead on the press conference with ECB's Lagarde. Her communication on the board's views of the neutral rate will be key - and in particular any insight into the strength of Eurozone domestic demand - which could prove decisive in any future decision to push rates into expansionary territory.
- Outside of the ECB, US CPI will be carefully watched. Into the print, overnight USD vols are generally contained - meaning markets see little chance of a market-moving print beyond what we saw in the reaction to soft PPI yesterday. Consensus looks for CPI to pickup on a headline Y/Y basis to 2.9%, but holding steady for the ex-food and energy metric.
BONDS: Bund Futures Drift Lower But Support Intact; Gilt/Bund Spread Tightens
Bund futures have drifted lower through the morning, currently -6 ticks at 129.08. Support is not seen until the 20-day EMA at 128.63. Headline flow has been relatively light, with markets awaiting the ECB decision (1315BST) and US CPI report (1330BST). A reminder that the ECB deposit rate is fully expected to be held at 2.00%, with Lagarde likely to stress policy is still in "a good place".
- 10-year Bund yields are +1.3bps at 2.665%, but remain comfortably within yesterday’s range. More importantly, benchmark yields have traded between 2.60% and 2.80% since late July.
- While the German curve leans bear flatter, semi-core/peripheral curves have twist flattened.
- Ireland has held its only auction of the quarter (and potentially its final auction of the year). While the 10-year IRISH/Bund spread was 0.5bps wider at 23bps heading into the 1000BST bidding deadline, it has since tightened back to 21.5bps.
- Short-end Italian supply was also digested smoothly, with the 10-year BTP/Bund spread inching below 80bps in recent trade (-1.5bps today).
- Gilt futures hold onto the recovery from early session lows. The initial move lower seemed to be linked to moves in wider core global FI markets. Futures last +11 at 91.44. Initial support and resistance at 90.65 & 91.66, respectively. Corrective bullish cycle in the contract remains intact.
- UK yields 0.5bp lower to 2bp higher, curve flatter. 2s10s and 5s30s more than 10bp off highs registered last week. Note that the 10-year Gilt/Bund spread is just over 1bp tighter at ~196.5bps.
- SONIA futures 0.5 lower to 1.0 higher, BoE-dated OIS showing ~9bp of easing through year-end.
- The short 7-Year PGT saw decent demand, with the DMO set to come to market with GBP1.25bln of the 0.50% Jan-29 gilt later this morning.
EQUITIES: Bull Cycle in E-Mini S&P Remains Intact, Sights on $6600 Handle Next
A corrective bear cycle in Eurostoxx 50 futures remains in play. Recent weakness resulted in a breach of 5368.81, the 50-day EMA. A clear break of this average strengthens a short-term bearish threat and signals scope for a deeper retracement towards 5166.00, the Aug 1 low and a key support. On the upside, the contract has recovered above the 20-day EMA - a bullish development. A stronger reversal would open 5445.00, the Aug 26 high. A bull cycle in S&P E-Minis remains intact and the latest pullback has once again proved to be a shallow correction. The contract traded to a fresh cycle high on Wednesday, breaching the Sep 5 high of 6541.75. This confirms a resumption of the uptrend and maintains the price sequence of higher highs and higher lows. Sights are on the 6600.00 handle next. Initial support to watch is 6469.93, the 20-day EMA.
- Japan's NIKKEI closed higher by 534.83 pts or +1.22% at 44372.5 and the TOPIX ended 6.79 pts higher or +0.22% at 3147.76.
- Elsewhere, in China the SHANGHAI closed higher by 63.088 pts or +1.65% at 3875.309 and the HANG SENG ended 113.94 pts lower or -0.43% at 26086.32.
- Across Europe, Germany's DAX trades lower by 20.82 pts or -0.09% at 23613.44, FTSE 100 higher by 39.43 pts or +0.43% at 9264.81, CAC 40 up 36.82 pts or +0.47% at 7798.14 and Euro Stoxx 50 up 4.12 pts or +0.08% at 5365.59.
- Dow Jones mini up 23 pts or +0.05% at 45563, S&P 500 mini up 8 pts or +0.12% at 6547.75, NASDAQ mini up 47.25 pts or +0.2% at 23925.
Time: 10:00 BST
COMMODITIES: Short-Term Gains for WTI Futures Considered Corrective
The trend condition in WTI futures is unchanged - a bear cycle remains intact and short-term gains are considered corrective. The pullback from the Sep 2 high highlights a possible reversal and the end of the corrective phase. Initial resistance to watch is $66.03, the Sep 2 high. Key short-term resistance has been defined at $69.36, the Jul 30 high. A stronger resumption of weakness would pave the way for a move towards $57.71, the May 30 low. Gold remains in a clear bull cycle and continues to trade closer to its recent highs. The yellow metal has traded to a fresh all-time high again this week. The break higher confirms a resumption of the primary uptrend and an extension of the sequence of higher highs and higher lows. The next objective is $3674.8, a Fibonacci projection. Initial firm support lies at $3474.7, the 20-day EMA.
- WTI Crude down $0.45 or -0.71% at $63.22
- Natural Gas up $0.01 or +0.26% at $3.037
- Gold spot down $14.69 or -0.4% at $3627.31
- Copper down $0.75 or -0.16% at $461.05
- Silver down $0.1 or -0.25% at $41.0708
- Platinum down $10.89 or -0.78% at $1383.04
Time: 10:00 BST
| Date | GMT/Local | Impact | Country | Event |
| 11/09/2025 | 1100/0700 | *** |  TR | Turkey Benchmark Rate |
| 11/09/2025 | 1215/1415 | *** |  EU | ECB Deposit Rate |
| 11/09/2025 | 1215/1415 | *** | EU | ECB Main Refi Rate |
| 11/09/2025 | 1215/1415 | *** | EU | ECB Marginal Lending Rate |
| 11/09/2025 | 1230/0830 | *** |  US | Jobless Claims |
| 11/09/2025 | 1230/0830 | ** | US | WASDE Weekly Import/Export |
| 11/09/2025 | 1230/0830 | * |  CA | Household debt-to-income |
| 11/09/2025 | 1230/0830 | *** | US | CPI |
| 11/09/2025 | 1230/0830 | *** | US | CPI |
| 11/09/2025 | 1230/0830 | *** | US | CPI |
| 11/09/2025 | 1245/1445 | EU | ECB Press Conference | |
| 11/09/2025 | 1415/1615 | EU | ECB Lagarde Presents Rate Decision on ECB Podcast | |
| 11/09/2025 | 1430/1030 | ** | US | Natural Gas Stocks |
| 11/09/2025 | 1530/1130 | * | US | US Bill 08 Week Treasury Auction Result |
| 11/09/2025 | 1530/1130 | ** | US | US Bill 04 Week Treasury Auction Result |
| 11/09/2025 | 1700/1300 | *** | US | US Treasury Auction Result for 30 Year Bond |
| 11/09/2025 | 1800/1400 | ** | US | Treasury Budget |
| 12/09/2025 | 0430/1330 | ** |  JP | Industrial Production |
| 12/09/2025 | 0600/0700 | *** |  GB | UK Monthly GDP |
| 12/09/2025 | 0600/0700 | ** | GB | Trade Balance |
| 12/09/2025 | 0600/0700 | ** | GB | Index of Services |
| 12/09/2025 | 0600/0700 | ** | GB | Index of Production |
| 12/09/2025 | 0600/0800 | *** |  DE | Germany CPI (f) |
| 12/09/2025 | 0600/0700 | ** | GB | Output in the Construction Industry |
| 12/09/2025 | 0600/0800 | *** | DE | Germany CPI (f) |
| 12/09/2025 | 0645/0845 | *** |  FR | HICP (f) |
| 12/09/2025 | 0700/0900 | *** |  ES | HICP (f) |
| 12/09/2025 | 0830/0930 | ** | GB | Bank of England/Ipsos Inflation Attitudes Survey |
| 12/09/2025 | 0900/1100 | EU | Labour Market Quarterly Statistics | |
| 12/09/2025 | - | *** |  CN | Money Supply |
| 12/09/2025 | - | *** | CN | New Loans |
| 12/09/2025 | - | *** | CN | Social Financing |
| 12/09/2025 | 1230/0830 | * | CA | Building Permits |
| 12/09/2025 | 1400/1000 | * | US | Services Revenues |
| 12/09/2025 | 1400/1000 | *** | US | U. Mich. Survey of Consumers |
| 12/09/2025 | 1400/1000 | ** | US | University of Michigan Surveys of Consumers Inflation Expectation |
| 12/09/2025 | 1600/1200 | *** | US | USDA Crop Estimates - WASDE |
| 12/09/2025 | 1700/1300 | ** | US | Baker Hughes Rig Count Overview - Weekly |
| 12/09/2025 | 1700/1300 | ** | US | Baker Hughes Rig Count Overview - Weekly |
