📈 CPI Pushes Rate Cuts Out

This is what we're currently looking at.

CPI Pushes Rate Cuts Out

Yesterday morning CPI data was released and it came in resoundingly hotter than expected.

Core inflation MoM jumped from 0.2% to 0.4%, and core inflation YoY rose from an expected 3.1% to 3.3%.

This was not the news the market was looking for, and we sold down as a result. Luckily, we got news that there may be peace on the horizon for Russia and Ukraine that helped the market claw back the losses brought on by CPI.

Rate Cut Probabilities

This is important because it has implications for when we will see our next rate cut.

Prior to CPI coming out, the most likely scenario was a 25bp rate cut in July.

This is no longer the case.

Now, we are more likely to see our next rate cut in September - and even that isn’t a given. Right now there is a 39.9% chance that rates remain unchanged and a 41.7% chance that we see a 25bp cut.

Obviously this isn’t ideal news, but it does provide opportunity for us to find names to trade based on this data.

I run through the sectors and stocks that are most impacted here: