US CPI: Preview Of The Most Important Macro Release This Week

With most of the market now more focused on upside inflation risk, we could see a rally in risk assets and a steepening in the yield curve if elevated expectations are disappointed

Published ET

US 1-Year Forward 1-Year Inflation Breakeven | Source: Refinitiv

US 1-Year Forward 1-Year Inflation Breakeven | Source: Refinitiv

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Headline CPI YoY (Jan) median estimate at 7.3%

  • Barclays, BMO, Wells Fargo at 7.2%
  • Citi, Goldman Sachs, Morgan Stanley at 7.3%
  • Credit Suisse at 7.4%

Core CPI Ex Food and Energy MoM (Jan) median estimate at 0.5%

  • Deutsche Bank, JPM, MS, UBS, WF at 0.4%
  • Citi, CS, GS at 0.5%


CS: We expect core CPI to rise strongly for the fourth consecutive month, increasing 0.5% MoM. This would lift the YoY reading further to 5.9% from 5.5%. Headline CPI should rise equally strongly by 0.5%, and the YoY would make a new cycle high of 7.4%.

DB: Roughly flat gas prices combined with a solid print in food should keep headline CPI (+0.36% unrounded vs. +0.47% previously) pretty close to core (+0.36% vs. +0.55%). Should our forecasts hit the mark, this would push year-over-year rates to 7.2% and 5.8%, respectively. (..) we expect elevated prints of +0.40% for both primary rents and OER – similar to their showing in the December data.

GS: We estimate rent +0.39% and OER +0.40% -- both essentially in line with the recent trend but this would be the 5th month in a row with OER at 0.4% or above, which has only happened once before in the last 40 years (in 1989).

JPM: we project another strong 0.7% m/m increase in the headline CPI (NSA) to 280.719, slightly above the market fixing, but a 0.44% increase in core, a touch below consensus. We look for continued firming across a number of components, with primary rent and OER expected to rise 0.40% and 0.42%, respectively, while we also project another 2.2% increase in used vehicle prices


  • Positioning is heavily skewed towards a further rise at the front end of the curve
  • If CPI comes in below expectations, we should see a rally in US fixed income, which would be a positive for risk assets like EM FX, EM HY credit
  • If CPI comes in above expectations, the market will price a higher probability of a 50bp hike in March, which could give a good opportunity to cover existing shorts, as any sharp moves lower have recently been met by profit taking