CPI Scenarios (YoY; Sep).
1.-Below 8%: initial rally that could turn into a significant rebound as long as underlying inflation is similar, a strong correction of the dollar, and bonds recovery.
1.-Below 8%: initial rally that could turn into a significant rebound as long as underlying inflation is similar, a strong correction of the dollar, and bonds recovery.
2.-Same as expected: initial indecision that could be the perfect excuse to finish taking out the last bulls waiting for a bottom, although anything could happen given the stock market's current pessimism and the huge overselling, a bounce with caution is not ruled out.
3.-Above expectations in the general and core CPI: we would have a definitive capitulation in bonds and the stock market with a VIX that could reach 40 and send the stock markets and bonds very low and a strong rise in the dollar against all currencies.
The last scenario would put a lot of pressure on the FED, which would realize that not even with the aggressive rate hikes it has been carrying out can it contain inflation, it would put us in unknown territory, both the stock market and the economy in general.
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