BIG DAY TOMORROW – CPI
I’ll be looking further into what I expect here and I’ll provide an update later today / tomorrow morning. For now I wanted to share a few interesting observations and some expectations…
USD– Technical’s say we’re putting in a top here and could be producing an ABC move to the downside. Fundamentals however still support a rise and this is where CPI is important tomorrow.
I think tomorrow has the potential for a lower than expected CPI print and if it does I think equities rally as the ‘’peak inflation narrative’’ takes hold…HOWEVERthis is a false as markets realise the fed isn’t slowing the hikes until it seems multiple downward moves on the CPI + ‘’Recession’’ narrative starts to hit as job losses spike and earnings outlook diminishes.
business inventories are now under cost pressure as the consumer weakens they can’t continue to sustain high prices for inventory so they are forced to reduce prices and this is deflationary. This is where the further upside in long duration bond yields may be limited so if we don’t get a ‘’peak inflation’’ print tomorrow it should come in the next print.
If we come over expectations tomorrow bond yields will spike further Risk assets will get owned.
