CICC: US November CPI significantly lower than expected, still maintains the prediction of peaking in the first quarter of next year.

CICC released a research report stating that the overall and core CPI in the US for November were significantly lower than expected and previous values. The overall year-on-year CPI was 2.74%, in line with expectations of 3.06%, and previous value of 3.01%; the core year-on-year CPI was 2.63%, in line with expectations of 3.03%, and previous value of 3.02%. The report maintains the judgment that there is no major inflation problem in the US, and expects the overall and core CPI to peak in the first and second quarters of next year. The main points of the report are as follows: - The first inflation data after the government shutdown was "explosive" with a cliff-like decline. - The overall and core CPI for November were significantly lower than expected and previous values. The year-on-year overall CPI was 2.74%, in line with expectations of 3.06%, and previous value of 3.01%; the core year-on-year CPI was 2.63%, in line with expectations of 3 .03%, previous value of 3.02%. The month-on-month data for October could only be calculated as the average of October and November due to the government shutdown, with overall at 0.10%, and core at 0.08%. - Market forecasts before the data release were already lower than market consensus, but the actual results were even lower than the lowest end of the major institutions, so calling it a "huge surprise" is not an exaggeration. After the data release, the US stocks surged, US bond rates and the dollar slightly declined, and the expectation for a rate cut in January increased slightly but remained below 30%. - How to understand the data? Firstly, the market is skeptical of the data due to the missing statistics caused by the government shutdown. Secondly, even though the market has reasons to doubt such a sharp decline, the downturn itself is not a big issue as the peak impact of tariffs has passed and recent US data on employment, consumption and PMI have generally weakened. - What will happen next? The good but possibly unreliable data for this month may confuse the market. Short-term market sentiment will be boosted, which is not necessarily a bad thing. The expectation for a rate cut in the future will be further strengthened, besides waiting for the confirmation of December inflation, also dependent on the nomination of the new chairman. - Therefore, compared to the market's concerns about recession or stagflation, the baseline scenario for the US economy and credit cycle next year is "recovery" and even in certain circumstances may lean towards "overheating".