The current consensus in the market is that the U.S. CPI in April increased by 0.2% month-on-month, up 8.1% year-on-year, down 0.4 percentage points from March; core CPI increased by 0.4% month-on-month, up 6% year-on-year, down 0.5% compared with March percent.
The US April inflation data released at 8:30 tonight will be the focus of much attention.
The current consensus in the market is that the U.S. CPI in April increased by 0.2% month-on-month, up 8.1% year-on-year, down 0.4 percentage points from March; core CPI increased by 0.4% month-on-month, up 6% year-on-year, down 0.5% compared with March percent.
The U.S. stock market plummeted after the Federal Reserve started its most aggressive rate hike in two decades. If tonight’s CPI data is higher than widely expected, the Fed’s fight against inflationary pressures intensifies. Under the expectation of a substantial interest rate hike, the U.S. stock market may be under heavy pressure again. On the contrary, the Fed is likely to maintain the normal process of raising interest rates, and the US stock market may usher in a reversal.
Among Wall Street investment banks that have already made forecasts, JPMorgan is the most pessimistic, while Bank of America and Goldman Sachs are relatively optimistic. But overall, Wall Street’s big banks generally predict that U.S. inflation is about to peak, but inflation remains high.
JPMorgan: Core inflation remains elevated
JPMorgan economist Michael Feroli forecasts that the U.S. CPI rose 0.4% month-on-month in April and 8.3% year-on-year, higher than Wall Street’s consensus forecast of 8.1%, but still lower than March’s 8.5%.
He sees signs of rising inflation remaining. While March’s surge in energy prices appears to have eased in April (the energy CPI is expected to fall 0.2% month-on-month in April), this is likely to be partially offset by strong increases in food and other goods and services prices. According to Feroli’s forecast, food prices will rise by 0.8% month-on-month in April, and the core inflation measure will rise by 0.39% month-on-month.
Feroli predicts that the year-on-year growth rate of the US core CPI in April fell to 5.9% from 6.5% in March, which was lower than the consensus forecast. But he also warned that the core CPI will remain at a high level.
Feroli sees inflation moving in a similar way to rents in April. JPMorgan expects tenant rents to rise by 0.47% month-on-month in April, and landlords’ equivalent rents to rise by 0.43% month-on-month.
Even so, rents, one of the main drivers of inflation, have peaked . The year-on-year growth in asking rents fell in April, according to apartment rental website ApartmentList.
It is worth mentioning that the landlord-equivalent rent released by the U.S. Bureau of Labor Statistics (BLS) lags inflation by 5-6 months, so rents may still continue to rise in the next 4-5 months.
The price increase of new cars slowed down, and the prices of used cars began to fall. JPMorgan expects new car prices to edge up 0.1% in April and used car prices to drop 2.0%.
It is worth noting that BLS is changing the way new car prices are calculated. From April, new car prices will be estimated directly based on transaction data from data and analysis service providers.
Bank of America: April CPI fell significantly to 7.9% year-on-year
Compared to JPMorgan, Bank of America is more optimistic. It forecasts that the U.S. core CPI rose by 0.3% in April, almost the same as in March, but lower than the 0.4% expected by consensus; given the small base effect, the year-on-year growth rate of the U.S. core CPI in April fell from 6.5% in March to 5.9%, which is the same as Xiaomo.
According to Bank of America’s forecast, the April CPI rose 0.07% month-on-month; it rose 7.9% year-on-year, which means that inflation did peak in March.
Bank of America expects the main drivers of inflation in April to be similar to March: auto prices dragged down headline inflation and underlying inflation was stronger.
Looking at the wholesale data, used car prices should see another sharp contraction, while new car prices could accelerate. Both JDPower’s forecast and average transaction price data from auto trading platform Truecar show a strong rebound in April for used cars after three straight months of price cuts. Meanwhile, Bank of America expects a broad range of commodity prices to rise against the backdrop of tight supply chains and rising commodity prices.
Like JPMorgan, BofA expects landlord-equivalent and prime-residential rents to continue to strengthen amid a tightening rental market, with lodging prices rising 0.45% month-on-month in April, but in contrast to the strong gains seen in the previous two months. milder than.
Goldman Sachs: Core Inflation Will Accelerate in Q2, Then Fall
Goldman turned its attention to the core PCE price index, the Fed’s preferred measure of consumer inflation.
Goldman Sachs believes that the annual rate of the core PCE price index (3.5%) over the past two months has fallen sharply from 6% in the previous four months. The index is expected to re-accelerate to an average of 4.25% in the second quarter, before falling back to 3.5% and 3.25% in the third and fourth quarters, respectively.
Goldman has three reasons for this:
First, inflation for supply-constrained durable goods will fall sharply to around 0% , which is the main reason Goldman forecasts a slowdown in inflation in 2022.
Second, housing inflation has peaked , but the year-on-year growth rate is still above 5%.
Third, inflation in other services will stabilize at just over 4%, as an overheated labor market is likely to keep wage pressures intact for some time. It is worth mentioning that Goldman Sachs had forecast in January and February that there is no risk of a wage-inflation spiral.
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