Huatai Securities says August core CPI MoM surprised to the upside, making a
September Fed rate hike a "necessary" option and raising the credibility cost of
not hiking. After hotter-than-expected August nonfarm payrolls and Middle East
tensions that pushed oil above $100, August CPI is now the market’s key variable
for pricing September. Core CPI and the Fed‑watched core services ex‑shelter
subcomponent showed no renewed easing. Downside risks to disinflation include
low inventories amplifying oil spikes, AI-driven upstream price pass‑through,
and localized new tariffs. The print could tilt neutral voters such as Waller
toward a hawkish September vote, reducing internal resistance to a hike; if
hawkish commitments from Jackson Hole are not met in September, Fed credibility
would suffer and long-end Treasury yields would be harder to contain.
