ENERGY: Need to Push Russia From Pretending to Negotiate: Kallas

Attention on the Equity Cash Open, futures are bouncing off their respective lows but Cash Indices should still be set to Gap lower with the French CAC40 leading.

• Calls: Estox 50: -1.19%, Dax: -1.46%, CAC: -1.17%, FTSE -1.05%, SMI -0.76%.

For the full MNI UK CPI Preview, including summaries of sellside views click here.

• Governor Bailey’s vote at the December MPC meeting is still far from guaranteed despite last week’s soft labour market data. We still think that assuming data comes in broadly in line with expectations and we don’t have an inflationary Budget that Bailey will vote to support a cut at the December MPC meeting, which would hence see a 5-4 vote for a pre-Christmas 25bp cut.
• The BOE November MPR forecast looks for headline CPI to come in at 3.60%Y/Y – this forecast is 11 hundredths below the August MPR expectation following a 21 hundredth downside surprise in September. The analyst previews that we have read look for a median around a tenth lower at 3.51%Y/Y (although note that most of the analyst forecasts are only to 1dp).
• 13/18 analyst previews that we have read (over 70%) look for headline CPI to round to 3.5%Y/Y (or lower) while only 2/18 look for an upside surprise for the BOE (rounding to 3.7%Y/Y).
• With sellside expectations skewed towards a softer print, and markets pricing in 18bp for the December meeting, we think that an upside surprise to the BOE’s forecast would therefore likely cause a larger market move than a downside surprise.
• For the October print, air fares provide the largest uncertainty while analysts expect food prices to come in lower than the BOE’s forecasts. Education and cultural services are likely to contribute positively to services CPI while rental and accommodation prices are expected to soften. We continue to see restaurant prices as a key barometer of the pricing power of consumer discretionary firms. We look into the details for all of these components in our preview.

Nothing to really alter the picture in markets in the comments that follow the meeting between Japanese PM Takaichi and BoJ Governor Ueda.

• Ueda noted that he told Takaichi that the Bank is operating a process of gradually adjusting its monetary easing, which the PM “seemed to acknowledge”.
• The Governor stressed the focus on a smooth landing towards the Bank’s inflation target.
• Ueda also noted that the two discussed FX but wouldn’t comment on specifics, instead reaffirming that it is desirable for FX to move in a stable manner, reflecting fundamentals.
• Takaichi underscored her focus on lowering the debt/GDP ratio.
• Follow up comments came from Chief Cabinet Secretary Kihara, who noted that monetary policy isn’t aimed at guiding FX levels and stressed that the government will continue to work closely with the BoJ.
• USD/JPY trades either side of 155.00 as the headlines cross, initial support and resistance of noted located at 153.49 & 155.53, with bulls remaining in technical control.
• A reminder that comments from Finance Minister Katayama, pointing to deep concern & alarm re: recent FX moves provided some support for the JPY in Tokyo hours, but failed to signal imminent intervention. Meanwhile, JPY hasn’t really been able to benefit from the risk-off tone seen thus far.
• JGB futures +4 at 135.75, off post-Tokyo highs of 135.81, in a similarly tight range over the latest round of comments.