|

US CPI / retail sales preview - Nomura

Analysts at Nomura explained their outlook for the key US events ahead today in CPI and retails sales.

Key Quotes:

CPI: We expect headline CPI to increase by only 0.1% (0.112%) m-o-m in October (Consensus: 0.1%) as a steady gain in core components was likely offset by lower energy prices. Our forecast for y-o-y inflation is +2.0% (2.048%) (Consensus: 2.0%). After a sharp increase in September, retail gasoline prices reversed the increase to some extent in October, leading to a 1.0% decline in the aggregate energy price index. 

Excluding food and energy, our forecast for core CPI is +0.2% (0.210%) m-o-m in October (Consensus: 0.2%) after a slightly weaker-than-expected reading of +0.1% (0.127%) in the previous month. Although core goods prices continued to make negative contributions to core CPI from March through September, we think that there are some inflationary pressures on core goods prices in October arising from various factors such as hurricane recovery efforts, the lagged effect from higher import prices and positive payback of lower drug prices in the previous month. Altogether, we forecast a y-o-y rate of 1.8% (1.759%) for core CPI in October (Consensus: 1.7%). We expect CPI NSA to be 246.680 (Consensus: 246.633). 

Retail sales: We expect core (“control”) retail sales to have increased a healthy 0.4% mo-m in October (Consensus: 0.3%), in line with healthy labor markets and steady income gains. The hurricanes had varied effects on September core retail sales. For October, we expect core retail sales to have recovered mostly from any residual impact from the hurricanes. Among noncore components, we expect sales at auto dealers to have declined slightly. October light vehicle sales slowed from the strong pace in September, which was boosted by high demand for replacement vehicles following the hurricanes. Although there still was some residual replacement vehicle demand in October, it was not enough to sustain the strong pace in September. Moreover, retail gasoline prices trended lower in October following a weather-driven increase in September. This implies that sales at gasoline stations may have fallen in October. Altogether, our ex-auto retail sales forecast is an increase of 0.3% (Consensus: 0.2%). We expect a 0.2% increase in total retail sales (Consensus: 0.0%)."

Author

Ross J Burland

Ross J Burland, born in England, UK, is a sportsman at heart. He played Rugby and Judo for his county, Kent and the South East of England Rugby team.

More from Ross J Burland
Share:

Editor's Picks

AUD/USD stays weak above 0.6900 after China’s trade data

AUD/USD struggles to capitalize on the previous day’s recovery and stays defensive on the 0.6900 level following the narrowing of trade surplus in China. Increased December Fed rate hike bets allows the US Dollar to pause its decline and weigh on the pair. US CPI data is next of note for the major.

USD/JPY retakes 158.00 on weak Japanese data; focus shifts to US CPI

USD/JPY attracts some dip-buyers and retakes 158.00 in the Asian session on Tuesday as a fall in Japan’s Household Spending offsets hawkish BoJ Summary of Opinions, undermining the Japanese Yen. Moreover, Fed hike bets support the safe-haven US Dollar and the currency pair. The market focus now shifts to the release of the crucial US CPI report.

Gold: $4,150 remains a tough nut to crack as US CPI report looms

Gold pauses recovery near $4,150 as sellers jump in amid pre-US CPI profit-taking. US Dollar licks wounds amid US-Iran optimism and falling Oil prices-led easing inflation concerns. Gold reclaimed key 21-day SMA support on the daily chart as RSI flipped bullish.

XRP and XLM extend losses as bears hold strong
Ripple (XRP) and Stellar (XLM) remain under pressure, trading below $1.093 and around $0.146 respectively on Tuesday as bears maintain control of momentum. In addition, weakening on-chain and derivatives metrics suggest that both XRP and XLM are at risk of a deeper correction in the coming days. CryptoQuant’s summary data shows a bearish outlook for both altcoins.
This weeks’ two big inflation reports will offer perspective

Payrolls on Friday surprised with a big gain, 165,000 new jobs rather than the 65,000 forecast. Also the unemployment rate fell from 4.2% to 4.1% although average hourly earnings are up only 0.4% ($32.75). This weeks’ two big inflation reports will offer perspective. Tomorrow it’s CPI and on Friday, which is a Friday the 13th, it’s PPI.

Gold reclaimed $4,100. Tuesday’s CPI test decides if it holds
Gold (XAU/USD) starts the week on a positive note, reclaiming the $4,100 psychological level as the US Dollar (USD) retreats from its recent highs. The precious metal recovers from Friday's losses, although investors remain cautious ahead of Tuesday's US Consumer Price Index (CPI) report, which could determine the next direction for Bullion.