• Notes from the Desk | US CPI - Still Too Hot

Notes from the Desk | US CPI – Still Too Hot Sept 13 2022

Notes from the Desk – US CPI – Still Too Hot

Today’s CPI number disappointed those looking for signs that the Federal Reserve (Fed) could ease off the brakes.

  • Annual inflation came in at 8.3% (8.1% expected) as increases in food prices offset the drop in gasoline prices
  • Core inflation came in at 6.3% (6.1% expected), driven by shelter and medical care costs

 

Today’s data reinforces worries that inflation is going to be ‘sticky.’

Implications.

  • The Fed could hike by at least 75 bps next week, with 100 bps also on the table.
  • US 2y interest rates are ~ 15 bps higher post the print, after trading 8 bps lower earlier this morning.
  • We anticipate that this will put a dent in the recent enthusiasm in equities, but don’t expect Canadian investment grade credit spreads to be materially impacted.
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