Alexandra Wilson-Elizondo, global head and co-chief investment officer of multi-asset solutions, Goldman Sachs Asset Management, New York:
“Today's CPI came in broadly as expected, which on the surface is the outcome investors were hoping for, but it does make next week’s rate decision a jump ball. The challenge is that the data does not fully capture some of the inflation pressures that have emerged more recently, and there is little evidence to suggest inflation is returning to target in the near-term.
"The survey period predates the latest move higher in energy prices, with Brent crude climbing above $100 as tensions around the Strait of Hormuz persist. It also comes before commodity strength broadened beyond energy into areas such as metals and agriculture.
"A clean inflation print today does not eliminate the possibility of stronger price pressures down the road. An in-line print keeps the Fed in play without forcing its hand, which is why investors are likely to remain focused on Warsh’s communications, or lack thereof, energy prices, labor market data, and what comes next rather than what was released today.”
Kim Forrest, chief investment officer, Bokeh Capital Partners, Pittsburgh:
"I am not convinced the Fed will raise rates next week, though the decline in year-over-year hourly wage growth may point to an increased likelihood of a rate move between now and the end of the year. But I remain unconvinced that's going to happen next week.
"Today's numbers are not enough to make investors run scared for the exits. We're going to see a positive day for equities. A lot of that stems from what was, in my view, an overly reactive negative move yesterday."
Brian Jacobsen, chief economist, Annex Wealth Management, Menomonee Falls, Wisconsin:
"Headline CPI is more noise than signal, but even the signal from core is telling us that inflation is moving the wrong way. Core inflation in June was 0% m/m, then 0.2% in July, and then 0.3% in August. It doesn’t require sophisticated statistical techniques to see that this isn’t the trajectory the Fed wants."
Joe Saluzzi, partner, co-founder and co-head of equity trading at Themis Trading, Chatham, New Jersey:
"I think they look pretty much in line; it was slightly different, but that to me is an inline print, which will probably not satisfy anybody, whether you're bullish or bearish. I think overall, certainly those numbers are still stubborn. You're still seeing it over 3% and we're going to continue seeing that. I don't think there's any change coming forward.
"The bond market doesn't like it, hasn't liked it for weeks now. And we'll see what the Fed does. But my opinion is I don't think the Fed will raise rates this month. I think they'll continue to say that they're watching and keeping an eye on things. But It does not warrant hike as of it at this point. And I do think that the Fed is going to start to signal that they'll look at maybe different measures and different metrics to really judge what they think inflation is, as opposed to the traditional lines of CPI and PCE and those types of things. But I don't think there's enough here."
Robert Pavlik, senior portfolio manager, Dakota Wealth in Fairfield, Connecticut:
"Everybody right now knows that inflation is a concern and this number, along with the jobs report, probably it has the market thinking that the Fed is going to raise interest rates as soon as next week. And if not next week, definitely in October. Inflation is a problem because the president started this war with no end game in sight. I don't see a great environment for the stock market.
"Yeah, I do (expect an interest rate hike next week). I don't see it as being a good move. I'd argue not to do it, not because I don't see inflation as being a problem, but because it's not going to solve the problem of supply for oil.
"In order to really solve this inflation problem, you have to really sort of scale back the overall economy, which means it's going to be a lot more than 25 basis points.... and that's going to be a whole hiking cycle. And I don't see the Fed willing to do that. But 25 basis points just puts another scare into the overall market, along with the problem that we have with the amount of debt that the country has."
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