📈 CPI Reaction

CPI came in higher than expected.

CPI Data

CPI on all accounts came in above expectations. This immediately caused a market sell-off.

The hot CPI was led specifically by shelter and gasoline prices rising at a greater rate than anticipated.

We are now looking at no rate cuts until June at the very earliest (20% chance). Right now July has a 37% chance of seeing a rate cut, down from 50%. September shows a 46% chance of a rate cut.

We are kicking the can down the road with no clear indication as to when rate cuts are coming. This uncertainty is bearish for equities.

CPI Reaction

We sold off across the board after the CPI news dropped. Small caps ($IWM) sold off the greatest amount because they have the highest concentration of interest rate sensitive names within the ETF.

The Nasdaq ($QQQ) held in the best of the indexes which is interesting. We saw some buying during trading hours in stocks like NVDA and ASML.

We also saw bonds sell off. It looks like we may be headed back to 5%+ on the 2 year yield.

Today at 8:30 we have PPI data that can move the market again. Be aware of this as you approach trading.