The Fed’s big day has finally arrived, with housing permits and starts taking a nose dive just in case the FOMC hasn’t recognized the economy’s weakness.

Our model suggests that CPI is still on the rise and financial conditions are still quite frothy. So, the FOMC really shouldn’t cut more than 25 bps. But, with so many vying for Trump’s favor, there will likely be more dissents than usual and a 50 bps cut can’t be ruled out.

Unless oil and gas prices break down (which we don’t expect) or tariffs are postponed or reduced (quite likely) CPI will remain high and/or continue to increase, giving rise to an increasing risk of stagflation.

Futures are flat ahead of the open.

continued for members…

A pullback to the SMA10 seems baked in. Whether it drops any more than that is subject to the Fed’s largess.

EURUSD is pushing higher, which along with a potential USDJPY breakdown… …is allowing DXY to finally roll over.And, even though CL and RB are both higher on the day…

…TNX is having a hard time remaining above 4.0%.

Stay tuned…