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Inflation Day
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Inflation Day

Stock futures are quiet ahead of a crucial CPI report at 0830…

Good morning contrarians! It is Wednesday, May 10. Inflation Day, with the Consumer Price Index at 0830 the main event that will likely move markets today and (possibly) beyond.

State of Play

As of 0620 all is pretty quiet:

  • Stock futures are flat with no major US index moving more than 0.2% from the break-even point;

  • Commodities are dropping, with WTI crude oil down 1% to trade south of $73/barrel and copper down 1%;

  • Bonds are unchanged. The 2-year yield is 4.04% with the 10-year sitting on 3.50%.

Consumer Price Index

Today is all about the CPI. Economists expect the headline figure to have increased 0.4% month-over-month in April, up from the 0.1% MoM recorded last month. The annualized figure is expected to remain at 5.0%. Core CPI is also expected to increase by 0.4% MoM, which is identical to last month’s reading, whilst the YoY figure is expected to come in at 5.5% (5.6% last month).

Friendly reminder that for all their (numerous) faults, economists usually get the CPI pretty right. The final number typically doesn’t deviate too much from their estimate — generally no more than 0.2 percentage points. The market is wise to this of course, so even a small miss can have an effect. In this case, if we get a hotter-than-expected reading it will drive the fear of Fed rate hikes back into the hearts and minds of investors.

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The daily podcast discusses the major market activity and economic data release schedule for the day ahead, with a contrarian bent. Also includes regular podcast episodes a day (or more) early and without ads or announcements.