Market commentary
US inflation bounces back at 1.9% yoy on higher energy. The core rate holds at a better-than-expected 1.7%
- In August, US headline CPI inflation edged bounced back to 1.9% yoy (from 1.7% in July), as core
inflation stood at 1.7%, higher than expected. - The fall in wireless prices (-13.2% yoy) continues to weigh on the core rate. Both shelter and
medical price inflation edged a bit up. - We do not read too much into this firming of inflation and expect it to remain broadly stable until
the end of the year. The unwinding of base effects will add to the impact of stronger import
prices and tighter labor market, bringing inflation back to 2% by the end Q1 2018. - Therefore we keep the odds of a December rate hike very low, while maintaining our call of three
increases in 2018.
In August, US CPI inflation picked up from 1.7% yoy to 1.9% yoy (0.1 pp above expectations), thanks to the marked increase in the energy component (+6.4% yoy against +3.4% in July).
Related Insights
A modest reporting season is expected. Estimates for 2019 remain too high versus our own
25/01/2019
The Q4 reporting season has started (15% of US firms reported, only 4% in the EU). Earnings growth in the US vs previous quarter looks lower (yoy), remaining solid in absolute terms, while it is weaker in Japan (10% reported).
Read MoreECB acknowledges shift of risks to the downside but is still in ‘assessment mode’
24/01/2019
At today’s meeting, the ECB did not adjust its commitment to leave key rates at the present level for at least through the summer of 2019. In light of the latest disappointing macroeconomic news flow, the Governing Council now unanimously sees risks tilted to the downside but differs on whether the growth slowdown is persistent.
Read More