Data released by the US Department of Labor on the 12th showed that the US CPI rose 3.7% in September, the same as in August, higher than the market expected 3.6%; On a month-on-month basis, it was up 0.4 per cent, slowing slightly from August's 0.6 per cent rise and above market expectations of 0.3 per cent. Excluding volatile food and energy prices, core CPI rose 4.1 per cent year-on-year and 0.3 per cent month-on-month, in line with market expectations.
A number of brokerages believe that the need for the Federal Reserve to raise interest rates has declined, and US Treasury yields will continue to stay high.
Cicc: The Fed may not be able to raise interest rates, but it will be necessary to keep a pressure on inflation
The latest research report of CICC pointed out that the reasons for inflation exceeding expectations come from three aspects, one is the rebound in the growth rate of owners' equivalent rent (OER) in housing, the second is the transmission effect of rising oil prices is still in, and the third is the sticky inflation of services other than housing. An important lesson from the inflation overshoot is that a slowdown in inflation is not a given, but requires continued monetary tightening. The Fed may not be able to raise interest rates, but it will be necessary to keep a pressure on inflation.
Fed officials are expected to speak more carefully in the coming weeks, and any comments that could be interpreted as dovish by the market are unnecessary and unnecessary. Investors will also become more cautious about the outlook for U.S. inflation, and Treasury yields may remain high for longer.
Citic Securities: It is expected that the probability of the Federal Reserve to raise interest rates again in November is low
Citic Securities believes that the US CPI in September was slightly higher than expected, and the core CPI growth rate was in line with expectations. Higher month-on-month growth in core services inflation and positive month-on-month growth in energy inflation combined to drive US inflation. It is expected that the probability of the Federal Reserve to raise interest rates again in November is low, and the US Treasury interest rate is expected to run at a high level of more than 4% for some time.
In recent days, several Federal Reserve officials have said that the need to raise interest rates has diminished because of soaring U.S. interest rates. The impact of US bond interest rates on the economy and financial markets is expected to gradually emerge, coupled with the decline of US core inflation is more in line with expectations, and the pressure on wage growth continues to ease, so the probability of the Federal Reserve raising interest rates in November this year is low. Due to the high resilience of the US economy, the Federal Reserve is expected to wait at least until 2024 when it cuts interest rates, so the short-term 10-year US bond interest rate or continue to run at a high level of more than 4%, but the rapid upward period of US bond interest rates may have passed.
Caitong Securities: Interest rate hikes or continue to pause, but high interest rates will be more lasting
Caitong Securities pointed out that after the release of inflation data, the market's expectation of the Federal Reserve's interest rate hike path has recovered slightly, and the probability of not raising interest rates in November is still about 90%, and the probability of not raising interest rates in December has dropped to 60% from nearly 70% a day ago. Although CPI remained unchanged last month and did not fall back, the interest rate hike may still be paused, or the duration may be longer. On the one hand, although the CPI growth rate is the same as last month, the core CPI has continued to fall, and only some components of the service item are more tenacious, but there is no need to raise interest rates again. On the other hand, judging from the recent barrage of comments from Fed officials, given the resilience of the economy and employment, the Fed may prefer a longer high-interest rate environment than a higher interest rate peak.
In the short term, due to the supply and demand of US bonds and the impact of high interest rates for a longer period of time, the significant downside of US bond yields is limited. From the actual action of the Federal Reserve, as the 10-year Treasury bond yield, 4.8% May have been close to the Federal Reserve's psychological ceiling of this round, and the possibility of breaking again in the future is unlikely.
Huatai Securities: The probability of raising interest rates by 25 basis points in November to December is not higher than 50%
Huatai Securities pointed out that considering the recent tightening of financial conditions, and employment and inflation pressures are expected to continue to cool down, the probability of interest rate hikes in November to December is less than 50%. The Fed will continue to watch the impact of previous rate hikes, as well as the trajectory of growth and inflation, before deciding whether to raise rates in November-December. Recently, the long-term interest rate of the United States has risen significantly, financial conditions have tightened significantly, and Federal Reserve officials have also released dovish signals, and the tightening of financial conditions has reduced the need for the Federal Reserve to continue to raise interest rates. In addition, in the fourth quarter, the U.S. economy faces many risks, including the auto union strike, the risk of government shutdown, and the repayment of student loan interest, and growth may significantly slow down.
Although September inflation exceeded expectations, partly due to the entertainment, hotel and other summer travel related items boosted, with the summer consumption boom past, the relevant sub-item inflation or marginal decline, and previously announced in August core PCE is only 0.1%, less than expected, the Federal Reserve can continue to wait for subsequent inflation data to confirm the future trend of inflation. Therefore, the probability of a 25 basis point rate hike in November-December is no higher than 50%; If inflation continues to exceed expectations, the probability of a rate hike will increase.