CPI Hotter Than Expected

Written by

February headline CPI came in at 0.4% versus 0.3% expected (and January.) Core CPI registered a 0.4% rise versus .03% forecast and 0.4% prior. YoY, headline was up 3.15%, up from 3.09% in January and a slight beat of the 3.1% expected, while core rose 3.8%, down from 3.9% in January.

Shelter and gas price increases were responsible for 60% of the rise in February.

This is in keeping with our Gas v CPI model which shows a slight uptick in MoM pricing in the midst of a YoY decline.

The short-volatility algos were busy this morning, with VIX diving more than 5% in minutes to back below the 200-DMA.

Futures, which might have been expected to tumble on the expectation of further delays to FOMC rate cuts, rallied instead. continued for members…
If the pre-market ramp holds, the green channel would remain intact and the RSI would continue to consolidate. More of the same… VIX’s nosedive (and pending 10/20 cross) will continue to be important to that equation… …as will EURUSD’s refusal to slip lower… …and USDJPY’s ability to bounce at its SMA200. GC and SI were a little softer after the CPI print. GC is backtesting the 1.272 Fib, with the IH&S neckline down at 2086 the more important support.