US CPI will be in focus today – TDS

Analysts at TD Securities (TDS) offered a brief preview of Thursday's important US macro data – the latest consumer inflation figures for January.

Key quotes:

“The Jan CPI report will lead the data calendar in the US on Thursday. Headline CPI was probably held down by a decline in gasoline prices; our 0.1% forecast is below the 0.2% consensus. Even so, the 12-month change probably rose 0.1 points to 2.4%. In contrast, we expect the 12-month change in core prices to fall 0.1 points to 2.2%, even with a 0.2% m/m rise, although it is a close call between 2.2% and 2.3%. Net net, the trend still looks tame.”

“Global rates see a strong rally as markets continue to sift through the potential fallout from COVID-19. If CPI overshoots, markets are likely to look past the print for the most part as the Fed has indicated they are comfortable letting CPI run on the hotter side — but a downside surprise could trigger a decent rally in fixed income markets.”

“Separately, we expect initial jobless claims to print a steady 215k for the week of Feb 8, near the 4-week trend and somewhat above consensus expectations (210k). Also of note, the Shelton and Waller Fed nomination hearings will commence in the Senate at 10am.”