«Ouchie!»
Traders,
The CPI report landed this morning, showing prices rose 9.1% from a year ago, topping estimates of 8.8%. Core CPI, which excludes volatile food and energy prices, also exceeded expectations at 5.9%. Hopes that we were already at peak inflation have been dashed – at least for another month. At the same time, the Federal Reserve received a green light to get even more aggressive with interest rate hikes.
Indeed, the market was already baking in a 75 basis point rate hike for the July 27th meeting. But after this morning’s red-hot number, we’ve seen a substantial shift in expectations. Yesterday the odds of a 75 basis point hike stood at 92.4%, and there was only a 7.6% chance of a 100 basis point (aka 1%) hike. This morning, the odds now stand at 51% chance for 75 bps and 49% chance for 100 bps. Naturally, stocks are taking it on the chin, with the S&P 500 down 1.25% in early morning trading. Watch to see if last week’s higher pivot low at $373 holds.
Video Of The Day: How to Start Paper Trading (IN THINKORSWIM)
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Chart of the Day: CME FedWatch
There was a significant change in rate hike expectations this morning, courtesy of the sky-high inflation print.
Today’s line up
Traders Lounge 11 AM EST
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The Coaches Show Replay
If you missed last night’s episode with Coach Tyler Craig where he talked about the S.T.E.P. Swing Trading System or would like to watch it again, check it out here.
Halftime Report 12:30 PM EST
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Cash Flow Condors 8:00 PM EST
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Trading Justice 484: 10 things you need to know about earnings season
Earnings season is fast approaching and to prepare you, let’s review 10 things you need to know about it.
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