Why Didn’t Hot Inflation Data Cause a Bigger Drop?
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What’s in Today’s Report:
- Why Didn’t the Hot Inflation Data Cause a Bigger Drop?
- Economic Takeaways – Are Stagflation Risks Rising?
Stock futures are lower to start the week as a rate cut by China’s central bank failed to bolster investors’ appetite for risk overseas while domestic focus shifts to NVDA earnings.
The PBOC slashed the 5-Yr Loan Prime Rate by a record 25 bp overnight (E: -5 bp) but the rate cut failed to ease lingering concerns about the health of the property market and markets are trading with a moderate risk-off tone this morning.
Looking into today’s session, there are two economic reports to watch: Leading Economic Indicators (E: -0.1%) which has been flashing a recession signal for months, and Canadian CPI (E: 0.4%) which could further stoke inflation worries if the number comes in hot.
There are no Fed officials scheduled to speak today, however the Treasury will hold 3-Month and 6-Month Bill auctions at 11:30 a.m. ET and a 52-Week Bill action at 1:00 p.m. ET. Based on the market’s increased sensitivity to rising bond yields in recent weeks, signs of weak demand in the auction could send yields to new highs which would act as a strengthening headwind on risk assets as we start the week.
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