But things would get dicey quickly if October’s CPI report comes in above expectations, with the bank expecting a 30% chance that headline CPI prints 8.1% to 8.3%. If that scenario plays out tomorrow, the S&P 500 could plunge between 2% and 3%.
The least likely scenario happening, according to JPMorgan, is a huge beat or miss in the October CPI report.
“Seeing a stepdown in inflation of this magnitude likely pulls the 10-Year yield below 4% (currently 4.158%) and triggers a sharp rally in stocks. This may also reset the yield curve lower with terminal rate expectations falling under 5%,” JPMorgan said about its most-bullish scenario.
The October report “could be as much [as] a ‘game changer’ as ‘hot’ August CPI derailed S&P 500,” he said.
