What’s in Today’s Report:
- Why Stocks Dropped Yesterday
- ECB Takeaways and Why Fragmentation Matters to Markets
Futures are slightly lower as markets look ahead to today’s latest read on inflation via the CPI report while news from China was again mixed.
Negatively, Shanghai residents will undergo mandatory COVID testing this weekend (another potential setback to fully reopening).
Positively, Chinese CPI came in under expectations, rising 2.1% yoy vs. (E) 2.3% yoy, allowing for more stimulus.
Today focus is on CPI and expectations are as follows: 0.7% m/m, 8.2% y/y; Core: 0.5% m/m, 5.9% y/y. Given yesterday’s late declines, unless we see an outright increase in CPI from April, I don’t think a firm CPI number should cause much more selling, while a slightly underwhelming CPI could prompt a solid rebound. The other notable report today is Consumer Sentiment (E: 58.5) and we’ll look for five-year inflation expectations to stay below 3.0%.