Decisive Battle Against CPI: December Inflation May Experience a "Rebound," Watch Out for Extremes Risks

On January 12, the market generally expects that the US CPI for December may experience a phased rebound (data will be released this Tuesday at 21:30), mainly due to the statistical correction effects after the Labor Department’s survey returns to normal, and does not necessarily mean a structural deterioration in inflation. The release of November non-farm payrolls and CPI is close in timing. Non-farm payroll data show that the US labor market continues to cool, with the unemployment rate rising to 4.6% (before rounding, 4.573%), the highest in nearly four years. However, due to the residual effects of the government shutdown, data reliability is questioned, and the market’s expectation of an early Fed rate cut has not been significantly reinforced. Rate futures indicate that the market generally expects the January meeting to keep rates unchanged, with the first rate cut possibly occurring in March, April, or June, but none of these options have a consensus pricing exceeding 50%, showing high uncertainty in the path forward. The mainstream expectation for this CPI is: overall CPI annual rate: slightly rising from 3.0% to 3.1%; core CPI annual rate: remaining at 3.0%. Three scenario analyses: 1. In line with expectations: limited impact on risk assets, market focusing on key technical levels. 2. Significantly above expectations (especially core CPI): rising concerns about inflation stickiness, potentially suppressing risk appetite in the short term. 3. Unexpected sharp decline (low probability): possibly resonating with employment weakness, reinforcing easing expectations, and benefiting risk assets. December CPI may become a short-term amplifier of market volatility, requiring close attention to the impact of “extreme readings” on interest rate expectations and asset pricing.