How To Trade The CPI: Scenario Analysis From JPMorgan

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by Tyler Durden
Tuesday, Sep 13, 2022 - 12:21 PM

Here is how JPM desk trader Andrew Tyler will be trading today's CPI print:

CPI is an important catalyst for the near-term setup thought. 75bps for Sept seems a foregone conclusion. Below is the US Market Intel scenario analysis for today:

  • CPI prints above 8.5% – negative for stocks as you see the bond market reprice the terminal rate higher and vol increases across asset classes.
  • CPI prints 8.3% - 8.5% - slight negative for stocks as hurts the disinflation narrative and increases fears that economists are misunderstanding the inflation situation. Could see stocks under pressure into next week’s Fed.
  • CPI 8.0% - 8.2% - positive for stocks and think we continue the market’s inertia higher. Feroli’s estimate is +8.1% and BBG survey is +8.1%.
  • CPI under 8.0% - Goldilocks scenario of seeing growth without inflation with inflation dissipating faster than expected with the potential to further accelerate given the housing and vehicle landscape.