Good morning contrarians! Stock futures are flat ahead of the CPI print at 0830…

Economists expect the headline number to come in unchanged month-over-month but the core CPI, which excludes food and energy, is expected to rise by 0.3% MoM. Last month those figures were 0.1% (headline) and 0.2% (core). The year-over-year figures anticipated are 6.5% (headline) and 5.7% (core). Last month they printed at 7.1% and 6.0%, respectively.

It’s hard to see how a month-over-month increase in core CPI is a good thing, but if that turns out to be the actual number, then the market has no excuse to sell off. Obviously if we get anything north of that it will drive the fear of Fed back into the hearts and minds of investors and we could see all of the gains from these last days come undone. If the numbers come in softer than anticipated it will provide more fodder for this mini bull run that started on Friday.

That’s the traditional playbook at least, but recent months have shown us that market reactions to CPI prints are unpredictable...

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