CPI Preview: Good, Bad, and Ugly – Start a free trial of The Sevens Report.
What’s in Today’s Report:
- CPI Preview: Good, Bad, & Ugly
- “Soft Components” of the NFIB Small Business Optimism Index Fall to GFC Lows
- Chart – Equal-Weighted S&P 500 Index (RSP) Remains in Steep Downtrend, Underscoring Thin Market Breadth
U.S. equity futures are modestly higher this morning despite escalating tensions in the Middle East overnight as investors embrace a continued pullback in global bond yields after steady inflation data in the EU overnight.
Economically, German CPI was unchanged from August, coming in at 4.5% y/y in September, meeting estimates. The inline inflation print is helping bonds continue to stabilize and supporting modest risk-on money flows this morning.
Today, focus will be on economic data early with PPI (E: 0.3% m/m. 1.2% y/y) and Core PPI (E: 0.2% m/m, 2.1% y/y) due out ahead of the bell.
From there focus will turn to the Fed with multiple officials scheduled to speak: Waller, Bostic, Collins. Additionally, the latest FOMC meeting minutes will come at 2:00 p.m. ET.
Bottom line, if PPI is more or less inline with estimates and the FOMC minutes and Fed chatter over the course of the day continue to support the less-hawkish narrative of recent. Then this week’s rally can continue, however and reversal back higher in yields will pressure stocks and other risk assets.
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