JP Morgan (pic via a Bloomberg - gated - report) outlines their expected range, and attaches probabilities, for US CPU for December:
JPM on why they expect the S&P500 will gain:
- investors are largely defensively positioned ... any evidence that the Federal Reserve’s inflation-fighting campaign is working will spark a rush to unwind bearish positions
- “This should aid the nascent bear rally, but we remain cautious as long as the Fed remains active with its tightening cycle,”
- “Our scenario analysis is skewed bullishly based upon positioning that could cause an overreaction via short-covering on a dovish print.”
- A repricing of expectations for a pause in the tightening cycle at the Fed’s March meeting seems likely only if CPI prints below 4.5% to 5%, their analysis shows.
But, if the CPI is higher than 6.6:
- expected to hit risky assets with bond yields rising along the curve
- a reading above 6.8% threatens to shock investors with what the team calls “a tail event.”
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The data is due on Thursday, 12 January 2023 at 8.30am US Eastern time, which is 1330 GMT.
