CPI lands into a market that already feels slightly offside

Oil has moved. Diesel has started adjusting. Petrol – the one that actually hits CPI – hasn’t fully fed through yet. That matters, because it means today’s print is likely to be lagging what’s already building in the system. So even if the number looks fine, it probably isn’t telling the full story. At the same time, SARB is leaning into the narrative that we’re in a better position than 2022 – stronger framework, lower target, better fiscal footing. Fair. But their own scenarios make it clear: if oil stays elevated, the path shifts quickly from stability to tightening. That’s the tension into this print.

Soft CPI

You’ll get a rally. Front-end squeezes, FRA softens. But it’s the kind of rally that invites selling. Petrol hasn’t hit yet – so CPI hasn’t either.

In-line CPI

No real signal. The market stays uncomfortable. FRA already drifting higher, global yields firm – the pressure doesn’t go away. Belly likely remains the weak spot.

Hot CPI

That’s the one that matters. Confirms what’s already starting to build – higher-for-longer starts getting priced properly. Belly takes the pain again, curve steepens. Positioning matters here. The squeeze we saw has already started to unwind, and the flow is telling you the same story – supply in the belly, selective demand elsewhere. The auction didn’t stop it, it helped it.

House view

We stay cautious at these levels. Even a “good” CPI is likely to be faded given the incomplete fuel pass-through and a SARB that is less tolerant of inflation surprises under a 3% regime. There’s still a bid in bonds – just not where the pressure is. The market will get a number today… but it may not get the truth.