Hanwha Securities "US CPI Expected to Be Better Than Expected"

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Hanwha Investment & Securities predicted on the 11th that the rebound in U.S. inflation will be temporary. Considering factors such as the base effect of core inflation and housing inflation trends, it is unlikely that inflation figures will reach the levels the market expects.

Kim Seong-su, a researcher at Hanwha Investment & Securities, stated, "Excluding the oil price variable, the inflation rebound is expected to be temporary, and even oil prices are unlikely to rise in a sustained manner."

Core inflation experiences the peak base effect in August and September. In the case of housing inflation, it is expected to act as a decelerating factor rather than a main driver of inflation from now on. Researcher Kim said, "The upward trend in housing-related indicators, which had sharply declined some time ago, will gradually be reflected in inflation," adding, "While an oil price rebound is an inflationary factor, it is not the case in the current indicators."

Fuel prices, gasoline prices, and international oil prices are all narrowing their year-on-year gaps but continue to decline. Kim analyzed, "Compared to July, the increases in gasoline prices and international oil prices in August were relatively small," and noted, "It is also important to pay attention to the fact that the recent sharp rise in oil prices occurred in September, not August."

Meanwhile, quantitative tightening (QT) is expected to continue for a long period. Since the banking crisis in March, the scale of QT and fluctuations in U.S. Treasury yields have shared the same directional trend. The reduction in the Federal Reserve's Treasury holdings increased significantly in April and May, causing yields to rise accordingly. The same applied in July and August, when the 10-year yield settled above 4%.

Researcher Kim diagnosed, "The Federal Reserve has demonstrated its ability to control market interest rate levels through QT," adding, "This will be a factor limiting a sharp decline in interest rates next year." He further added, "Although QT may be 'temporarily paused' depending on market conditions, it is unlikely to be 'terminated.'"

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