Stocks Finished Lower Ahead Of This Morning's CPI Inflation Report Image: Bigstock Stocks closed sharply lower yesterday, erasing their weekly gains and putting the indexes on the defensive going into this morning's CPI report. The last CPI report, and PPI report for that matter, both ticked lower from previous readings, which have led some to speculate that inflation may have peaked. We will get a better picture of that this morning when the Consumer Price Index is released, and we'll see if it ticked lower once again, or if it ticked back up. We'll then get the Producer Price Index next week. But first things first. The consensus for this morning's CPI is 8.2% y/y vs. last month's 8.3% and March's 8.5%. Ex-Food and Energy, the consensus is for 5.9% y/y vs. last month's 6.2%. If it comes in hotter than expected, then it's likely to be interpreted that the Fed may raise rates higher and faster. But if it comes in as expected or lower, that could lead people to believe that the Fed will stay on its current path of 50 basis points later this month and again in July, and then possibly slow down to 25 basis points in September. That's all conjecture at this point. But the number is not, and we'll find out what that is at 8:30 AM ET. In other news, the European Central Bank (ECB) said they would be raising interest rates in July. The first time in a decade. A quarter-point next month, and then a half-point in September. And their bond buying program will wrap up at the end of this month (June). (Euro zone inflation is at a record-high 8.1%.) Yesterday's plunge was a bit surprising ahead of this morning's report. So traders who pressed the market yesterday will find their actions to either be prescient, or premature. We shall see. Best, Kevin Matras Executive Vice President, Zacks Investment Research |
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