CPI Disinflation and Soft Landing
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S&P 500 offered even less of an opening dip than the day before, and kept rallying no matter what the bond market was doing. Dollar confirmed the daily easing of conditions, allowing the stock market upswing even if yields haven‘t gone much anywhere over the last couple of days, and actually had seen trouble rising above my 4.10s% on the 10y.
Today‘s CPI will unlikely present a bull trap in the sense of lasting reversal – it would be a buying opportunity especially if 0.3% news is sold as I tweeted, or oil prices not retreating too fast lately, force an 0.4% reading – just like I wrote two days ago. And the incoming figure was indeed sell the news one, and now it‘s about yields with USD releasing its grip modestly so that stock buyers can reemerge (not exactly shellshocked).
This is still the time of soft landing consensus trades, with tech coming back strongly and stocks overall showing good rotations and resilience to bond yields.
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Let‘s move right into the charts (all courtesy of www.stockcharts.com) – today‘s full scale article contains 3 of them, featuring S&P 500, precious metals and oil.
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Gold, Silver and Miners
Precious metals have done their move to the downside, and the only question is whether they would dip some more or not on inflation data, with PPI unlikely to diverge from CPI in the direction much. Thus far the pre-CPI dip isn‘t materializing, meaning markets are expecting continued disinflation, but I keep favoring the need to spend more time in the $2,020s.
Crude Oil
Crude oil continues basing with a bullish bias, and accumulation accompanied by inability to push prices into and through the $69 - $70 support zone, is telling. Real assets would benefit from a favorably low and expected inflation data spurring more rate cut bets, but of course are waiting for the actual cut to truly celebrate.
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