CPI forecast (Feroli / JPM Economics)

The baseline call is for a firm CPI print, driven by technical “catch-up” effects after a period of disrupted data collection.

Headline CPI (MoM): +0.38%

Core CPI (MoM): +0.41%

Implied YoY: 2.7% headline, 2.8% core

Why they expect a “pop” in this print

Government shutdown distortions: BLS reportedly held prior-month prices constant (effectively “flat-lined” some components), which can mechanically boost the next update when prices “reset.”

Holiday sales oversampling: Data collection resumed later, potentially over capturing sale prices in the prior month (especially for goods), which would have artificially depressed goods inflation—setting up a bounce-back.

Scenario map: Core MoM vs. 1‑day SPX move (Trading desk view)

They focus on core MoM buckets and assign probabilities + typical 1‑day SPX reaction ranges.

5.0% prob: Core MoM > 0.45% → SPX −1.25% to −2.5%

32.5% prob: Core MoM 0.40%–0.45% → SPX +0.25% to −0.75%

40.0% prob: Core MoM 0.35%–0.40% → SPX +0.25% to +0.75%

20.0% prob: Core MoM 0.30%–0.35% → SPX +1.0% to +1.5%

2.5% prob: Core MoM < 0.30% → SPX +1.25% to +1.75%

Options market “expected move”

Options expiring Tuesday price about a ~0.6% move (as of Fri Jan 9 close).

Desk takeaway (positioning + asymmetry)

Their framing is: fundamentals lean hawkish, but equity tape outcomes are skewed bullish.

Setup: markets are “bulled up,” and they see hawkish print risk > dovish print risk.

But SPX reaction distribution isn’t symmetric (they explicitly argue the market’s upside/downside behavior isn’t balanced).

Since Oct 1, 2025: 5× +1% up days vs 7× −1% down days (used as context for skew/behavior).What components they highlight (mechanics under the hood)

This section is basically “why the seasonal/collection quirks matter.”

Vehicles

New vehicles: tracked industry data suggests ~+0.6% in December.

Used vehicles: wholesale declines imply ~−1.0% SA.

Broad goods & services impacted by bimonthly sampling

Many prices may not have been properly refreshed since August due to bimonthly collection schedules + shutdown disruption → potential upward catch-up (they cite medical care as an example).

Shelter (OER & rent) has its own lag/rotation issue

Because shelter is collected on a rotating 6‑month panel, treating October as “unchanged” likely biased down measured OER/rent.

They expect December shelter prints to better reflect underlying trend, potentially ~2× November’s shelter pace.

The “bias down” from the skipped update may persist until the relevant panel refreshes (they mention next April).

Business surveys (ISM/PMIs) suggest:

Input prices still rising

Earlier reluctance to raise selling prices (protect market share), but with recent GDP strength, more firms may be passing costs through.

Tariff pass-through context (JPM PB estimate): ~45% vs ~70% in “Trump 1.0”.

Macro risk: another inflation peak is seen as a higher-probability equity risk in 1H26.

Policy implication: CPI + Friday’s NFP could push Fed cuts further out; Feroli’s view: Fed takes no action in FY26.