All Eyes on CPI

Written by

This is one of the biggest weeks for economic data in quite some time. We get October CPI tomorrow, PPI and retail sales on Wednesday, initial claims on Thursday, and housing starts and permits on Friday. Of all these data, CPI looms largest for the markets.

Recall that September core CPI came in at 4.1% YoY, with shelter (+7.2% YoY) accounting for over 70% of the increase. With the recent sharp drop in mortgage rates, shelter could remain stubbornly high, complicating the Fed’s inflation fighting efforts and thus paring the market’s optimism.

Futures are off moderately in advance of tomorrow’s data after nailing our channel top target.

continued for members…

Note that ES has pushed slightly above its flag pattern/falling channel… …while SPX is sitting right at the upper bound of its.

VIX definitely showed its force with the latest plunge, but it has since bounced slightly higher. Note that it remains below its SMA10.EURUSD continues to defy gravity… …while USDJPY is still inching higher.GC and SI have reached interim targets and are at a decision point.