Jan CPI rose 3% YoY and 0.5% MoM, in line with our expectations but higher than consensus. Core CPI rose even more, reaching 3.3% YoY. PPI will be released tomorrow.
Futures are off sharply.
continued for members…Our Gas/CPI model showed inflation peaking in January, but of course that forecast didn’t anticipate tariffs, which are almost certainly going to be inflationary if/when enacted.
Note that this results in yet another backtest of ES’ falling white channel top and should enable SPX to remain above its SMA50.
VIX is likely being suppressed, with a reaction of around 3% (in order to keep futures’ losses to about 1%.)
While the euro has barely reacted, the USDJPY has popped over 1.1%. The net effect on the DXY is not very significant.
Oil and gas, perhaps responding to an angry call from the White House, are both retracing yesterday’s gains.
Though the 10Y is up sharply.
The 2s10s has steepened somewhat, rising to 28 bps.
continuing…