According to data released by the US Department of Labor on the 12th, the US CPI rose 3.7% year-on-year in September, which is the same as in August and higher than market expectations of 3.6%; The month on month increase was 0.4%, slightly slower than the 0.6% increase in August and higher than the market expectation of 0.3%. Excluding volatile food and energy prices, the core CPI increased by 4.1% year-on-year and 0.3% month on month, in line with market expectations.
Many securities firms believe that the necessity for the Federal Reserve to raise interest rates has decreased, and US bond yields may continue to remain high.
CICC: The Federal Reserve may no longer raise interest rates, but maintaining a high-pressure stance on inflation will be necessary
The latest research report of CICC pointed out that the reasons for inflation exceeding expectations come from three aspects: firstly, the rebound in the month on month growth rate of owner equivalent rent (OER) in housing; secondly, the transmission effect of oil price rise is still present; and thirdly, the stickiness of inflation in services other than housing still exists. Inflation exceeding expectations brings an important inspiration, which is that slowing inflation is not something that should be expected, but rather a prerequisite for sustained monetary tightening. The Federal Reserve may no longer raise interest rates, but maintaining a high-pressure stance on inflation will be necessary.
It is expected that Federal Reserve officials will be more cautious in their speeches in the coming weeks, as comments that may be interpreted by the market as doves are unnecessary and unnecessary. Investors will also be more cautious about the outlook for US inflation, and US bond yields may continue to stay high for longer.
CITIC Securities: The probability of the Federal Reserve raising interest rates again in November is expected to be low
CITIC Securities believes that the US CPI in September was slightly higher than expected, and the core CPI growth rate was consistent with expectations. The higher month on month growth rate of core service inflation and the positive month on month growth rate of energy inflation jointly drove the month on month growth rate of inflation in the United States. The probability of the Federal Reserve raising interest rates again in November is expected to be low, and the US bond interest rate is expected to remain at a high of over 4% for a period of time.
Recently, several Federal Reserve officials have stated that due to the soaring US bond interest rates, the necessity of raising interest rates has decreased. The impact of US bond interest rates on the economy and financial markets is expected to gradually emerge. Coupled with the downward trend of core inflation in the United States, it is more in line with expectations, and the pressure on wage growth continues to ease. Therefore, the probability of the Federal Reserve raising interest rates in November this year is relatively low. Due to the high resilience of the US economy, the timing of the Federal Reserve's interest rate cut is expected to wait until at least 2024. Therefore, the short-term 10-year US Treasury bond interest rate may continue to operate at high levels above 4%, but the period of rapid upward movement of US Treasury bond interest rates may have passed.
Caitong Securities: Interest rate hikes may continue to be suspended, but high interest rates will be more sustainable
Caitong Securities pointed out that after the release of inflation data, market expectations for the Fed's interest rate hike path slightly rebounded. The probability of not raising interest rates in November is still around 90%, and the probability of not raising interest rates in December has decreased from nearly 70% a day ago to 60%. Although CPI remained flat last month and did not fall back, interest rate hikes may still be suspended for a longer period of time. On the one hand, although the CPI growth rate remained flat last month, the core CPI has continued to decline, and only some of the service items are relatively resilient, but there is no need to raise interest rates again. On the other hand, based on the recent intensive voices of Federal Reserve officials, due to the resilience of the economy and employment, the Federal Reserve may lean towards a longer high interest rate environment compared to higher interest rate peaks.
In the short term, due to the supply and demand of US bonds and the prolonged impact of high interest rates, there is limited room for a significant decline in US bond yields. Judging from the actual actions of the Federal Reserve, as the yield of 10-year treasury bond bonds, 4.8% may be close to the psychological ceiling of the Federal Reserve in this round, and it is unlikely to break through again in the future.
Huatai Securities: The probability of a 25 basis point interest rate hike from November to December may not be higher than 50%
Huatai Securities pointed out that considering the significant tightening of financial conditions in the near future and the expected continued cooling of employment and inflation pressures, the probability of interest rate hikes from November to December may be less than 50%. The Federal Reserve will continue to observe the impact of previous interest rate hikes, as well as the trends in growth and inflation, in order to decide whether to raise interest rates from November to December. Recently, long-term interest rates in the United States have significantly increased, and financial conditions have significantly tightened. Federal Reserve officials have also released dovish signals, as the tightening of financial conditions has reduced the need for the Federal Reserve to continue raising interest rates. In addition, the US economy faced many risks in the fourth quarter, including auto union strikes, government shutdown risks, and student loan interest repayment, with growth likely to decline significantly.
Although the month on month inflation in September exceeded expectations, partly due to the boost from entertainment, hotels, and other summer travel related sub items. As the summer consumption boom passes, related sub item inflation may marginally decline, and the previously announced core PCE in August was only 0.1% month on month, which was lower than expected. The Federal Reserve can still wait for subsequent inflation data to confirm the future trend of inflation. Therefore, the probability of raising interest rates by 25 basis points from November to December may not be higher than 50%; If inflation continues to exceed expectations in the future, the probability of interest rate hikes will increase.