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Tackle Today: Inflation Comes in A Tad Hot

January 11, 2024

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«What Will That Mean for Assets?»

Coach Mark here.

Inflationary data came out today and expect the word “sticky” to be used a lot in financial circles in the coming days. We will break out all the data in the Halftime Report today but headline inflation came in hotter than expected, core CPI as expected and Core CPI Services Ex-Shelter (also referred to as SuperCore and something Jerome Powell has specifically mentioned as an important gauge) rose 0.4% month-over-month. Certainly nothing today that rate hikes are imminent or coming soon as inflation has not exactly been beaten yet.

Are these startling numbers that will cause panic? Likely not. Do they put into doubt the possible six rate cuts that the market has priced in for 2024? Likely so. Much of this rally has been based on rate cut expectations and for the rally to continue you are going to need something else now to drive it further as I have a sneaky feeling those six rate cuts priced in are going to drop to five and then four in the coming month potentially.

 Earnings season kicks off tomorrow and it will be interesting to see where the narratives head from here. If the market cannot find a new bullish narrative soon then traders likely will find trades on both the bull and bear side of the equation…something that has been absent for the last couple of months.

Have a fantastic Thursday!

Chart of the Day: U.S Dollar ($DXY)

Not seeing dramatic movement in the dollar or yields this morning. This remains an important (if not the most important) chart to watch right now.

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