As expected, CPI comes in lower than expected down to 4.8% versus the 5% expected. This comes coupled with lower energy prices and lower used car values which tumbled down 5%. I still doubt the accuracy of these numbers as there is conflicting data that has been reported . What does this mean for the Fed?
The market is now factoring in a lower chance of a Fed rate hike coming into the next meeting. However, we are far off from the Fed's inflation goal, so another rate hike would be the smartest plan. But Powell is known for following politics over economic data. There are a lot of fed press conferences to come, so will be interesting to see how the rest of the Fed members view this data. Keep in mind , inflation is still extremely high and sitting on their hands with another pause could cause a whiplash of inflation to come back or for us to hit stagflation.
The 2 year yield tumbled on this news, as the stock market soared on the news. This brings the NDX 52 week highs back into view and the market is setting up for another short term short after the news settles. We will be looking to sell some theta on #NVDA, #TSLA, #NFLX before the big earnings next week.