CPI Front & Center | 12/13/2022
Posted: Dec. 13, 2022, 7:47 a.m.
E-mini S&P (March) / NQ (March)
S&P, yesterday’s close: Settled at 4025.00, up 56.75
NQ, yesterday’s close: Settled at 11,829.75, up 146.75
Fundamentals: Inflation is at the forefront; it has been all year. The U.S. CPI report for November is due this morning at 7:30 am CT, 29.5 hours before the Federal Reserve concludes its two-day policy meeting with an interest rate hike and statement, but who is counting? Expectations are for headline CPI to increase 7.3% y/y, the lowest since December 2021, and by +0.3% m/m. As for Core CPI, excluding food and energy, it is expected to increase by 6.1% y/y, a four-month low, and by +0.3% m/m. It is important to note the Cleveland Fed Inflation Nowcast has expectations for CPI one-to two-tenths above analysts across the board. The wildcard is Services, it rose by 0.41% in October, but Services Less Rent of Shelter actually disinflated by -0.10%.
A narrative of ours for CPI data has been understanding where the risks are skewed. When the market is near the lows, and inflation expectations are elevated, risks are skewed to the upside (market price action). When the market is elevated, and CPI expectations are evolving lower, the risks are skewed to the downside. Bill Baruch joined the CNBC Halftime Report, and risks being skewed ahead of CPI was a topic of discussion.
The S&P has sold off as much as 5% from its recent peak, but a rebound over the last 24 hours has begun skewing the risks to the downside. We are not trying to guess where the market will trade post CPI but where a reaction to the data can become overly excessive in the near-term. Especially if it is only slightly hot and digested against the Cleveland Fed model.
Today’s tape will lead into tomorrow’s Fed meeting. We plan on updating you throughout today, helping you game plan your response to CPI and prepare for tomorrow’s Fed decision.
Do not miss our daily Midday Market Minute, from yesterday.
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NQ (March)
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Crude Oil (January)
Yesterday’s close: Settled at 73.17, up 2.15
Bill Baruch joined the Yahoo Finance closing bell Monday afternoon to discuss all things energy.
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Gold (February) / Silver (March)
Gold, yesterday’s close: Settled at 1792.3, down 18.4
Silver, yesterday’s close: 23.403, down 0.314
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Silver (March)
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