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Morgan Stanley also shouted! On Wednesday, the US CPI will be

Release Time:2024-05-13

On Wednesday, heavy US CPI inflation data will be released. Last month's CPI, which exceeded expectations, rose more than expected, hitting the market's interest rate cut expectations. Will CPI continue to rise in April and suppress interest rate cut expectations?

Seth Carpenter, chief economist of Morgan Stanley, pointed out that housing inflation accounts for 40% of the core CPI and 18% of the core PCE. Therefore, no matter how housing inflation goes, the whole CPI data may follow.

The bank believes that the current rent data is very weak. Despite the surge in immigration last year, the vacancy rate of multi-family apartments is approaching an all-time high, and housing inflation has released a downward signal. On Wednesday, the US CPI will be "significantly lower than expected":

In the past three months, there has been "no further progress" in fighting inflation. For PCE inflation, commodities have promoted a large part of the growth, and computer software, video tapes and clothing have contributed to two-thirds of the acceleration of inflation. Inflation is special, not universal.

In fact, using the weight of CPI, core commodity inflation has been negative for two months in the past three months, and there is room for more direct decline. The supply chain has basically recovered, and the first quarter GDP data shows inventory correction.

Inflation in services other than housing also shows some inflationary pressures. In the past few months, the portfolio management and investment advice of financial services have brought surprises. But these components are noisy and related to the fluctuation of stock price to some extent.

Inflation in auto insurance has been more persistent, but insurance companies are catching up with the higher costs faced in the past few years. This impulse does not reflect the current economic situation, and it is beginning to fade on its own.

Morgan Stanley also pointed out that the previous seasonal adjustment factors led to higher inflation data in the first quarter than the actual situation, which will be corrected later:

Our American team recently found that seasonal adjustment may have exaggerated inflation in the first quarter of this year, which indicates that there will be a correction in the future. Taking all these factors into consideration, inflation should fall this year ... When inflation falls, the Fed will start to cut interest rates.

Standard Chartered Bank analysts also said earlier that housing inflation may go down soon and drive down core inflation. I also agree with this view in a recently released report.

Wednesday's CPI report will be crucial to the timing of the first rate cut. Since the beginning of this year, the market once priced interest rate cuts of 25 basis points for nearly 7 times, but now the pricing is only slightly lower than twice, and the start time of interest rate cuts has been postponed to September.

Morgan Stanley predicts that CPI will increase by 0.29% month on month in April, rental inflation will slow down, core commodity prices will drop slightly, and the upward trend of service inflation will be slightly reversed.

Risk warning and exemption clause

The market is risky and investment needs to be cautious. This paper does not constitute personal investment advice, nor does it take into account the special investment objectives, financial situation or needs of individual users. Users should consider whether any opinions, viewpoints or conclusions in this article are in line with their specific situation. Invest accordingly at your own risk.

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