Good morning contrarians! Futures are pointing to gains ahead of the PCE Deflator (the Fed’s preferred inflation gauge) at 0830…

The numbers we’re looking for are 0.5% month-over-month for the headline figure and 0.2% MoM for core, which excludes food and energy. This would translate to year-over-year measures of 3.5% for headline and 3.9% for core.

If we get 0.1% or even 0.0% it stands to reason that we should get a rally in stocks and bonds alike. It was December 2020 when we last saw the core PCE at 0.

And if the number prints above 0.2%? Then you can expect the selling to resume with force. Bond yields should rise again, especially at the short end of the curve.

More on this in today’s briefing and podcast: