四季度美国通胀压力可能再起。主要因素可能是房租通胀（房价）、核心非耐用品（进口价格传导）。若美国就业强势持续，则核心非房租服务通胀也可能成为通胀韧性的来源。展望明年，通胀粘性仍是主基调，在降息的累计影响下，存在结构性地二次通胀压力。Source: SWHY Macro.
Author: Wang Maoyu, Zhao Wei.
The US non-farm data is significantly weaker than expected, and the unemployment rate has continued to rise to 4.3%, triggering the recession signal of the 'Sahm rule' for the first time, causing a significant market shock. This report believes that the signal noise in August is large and there is a possibility of discontinuity. The key lies in whether there are exogenous shocks that may occur later.
Authors: Zhao Wei, Chen Dafei, etc.
The US economic and CPI data for August and September have debunked the previous recession trade and excessive rate cut trades. Will there be any changes in the pace of rate cuts by the Federal Reserve in the future? We believe that two 25 basis point cuts within the year are still the baseline assumption, but we need to pay attention to the possibility that rate cuts next year may not meet expectations.
1. In September, the US CPI inflation exceeded expectations, how is the quality?
US CPI in September performed strongly above market expectations, with core inflation heating up apart from rental. The year-on-year US CPI for September was 2.4%, with a month-on-month increase of 0.2%, while market expectations were at 2.3% year-on-year. Looking at the structure of core inflation, vehicle inflation mainly reflects the rebound in used car prices in previous months, core non-durable goods inflation reflects the rise in import prices since the beginning of the year, and core non-rental services inflation corresponds to the fluctuating growth rate of residents' wages in recent months.
In the fourth quarter, inflationary pressures in the US may rise again. The main factors may be rent inflation (housing prices) and core non-durable goods (import price transmission). If the strong US employment continues, core non-rental service inflation may also become a source of inflation resilience. Looking ahead to next year, inflation stickiness remains the main theme, and under the cumulative impact of interest rate cuts, there may be structural secondary inflationary pressures.
2. Where does the resilience of the US economy in the third quarter come from?
Various data points to a stronger resilience of the USA economy in the third quarter. Examples include the US September employment data released during the National Day holiday, and the September ISM Services PMI. From more frequent data, the Citibank US Economic Surprise Index has been rising continuously since July. According to the latest real-time forecast from the Atlanta Fed, the seasonally adjusted quarter-on-quarter annualized growth rate of the US GDP in the third quarter may reach 3.2%, higher than the second quarter's growth rate.
After the announcement of the second-quarter GDP in the USA, the market forecasts economic growth of less than 2% for the second half of the year. Why is the US economy gradually showing more resilience in the third quarter? We believe that there may be two potential supporting factors: fiscal stimulus and relaxed financial conditions. The relatively low leverage of the US entities also mitigates the impact of hurricane in the third quarter on the economy.
Outlook: The probability that the Federal Reserve will cut interest rates in November is still the baseline assumption.
A November interest rate cut by the Federal Reserve is still a high-probability event. The September CPI data in the USA did not have a significant impact on the rate cut expectations. High initial jobless claims data this week (due to hurricanes) may be a factor. As the Federal Reserve's current focus on employment is far higher than inflation, a 25 basis points rate cut in November is still the baseline assumption, but attention should be paid to the possibility of rate cuts falling short of expectations next year (current trading 100bp+).
There are two potential headwinds for the economy in the fourth quarter. On one hand, the recent rise in US bond yields may constrain the relaxation of financial conditions. On the other hand, with the impact of the new fiscal year, election season, and the approaching debt ceiling on January 1st next year, it is necessary to observe whether the US fiscal policy can continue to be supportive in the fourth quarter. The future trend of US bond yields needs to be observed along with the economic and election results, while the US dollar index needs to pay attention to the Japanese central bank's interest rate hike process (Shinzo Abe leaning dovish) and the European Central Bank's interest rate reduction process (the ECB holds its monetary policy meeting next week).
Risk Warning: Escalation of geopolitical conflicts; US economic slowdown exceeding expectations; Federal Reserve shifting back to 'hawkish' stance.
Editor/Jeffy
