Inside Markets

Short-term support is in focus as the global disinflation cycle is challenged by recent hotter-than-expected inflation data including US ISM as well as German, France and Spain CPI. 

February US growth data disappoints for a second day with consumer confidence, Chicago PMI and Richmond Fed Index all missing expectations.

A higher median dot coming out of the March 22 Fed meeting is the most apparent near-term risk for equity markets.

. Bond markets are larger and more liquid than equity markets, so when there’s a disconnect between the behavior in bond markets and equities, it’s best to overweight the signaling coming from bonds.

A downward revision to Q4 GDP and upward revision to Q4 PCE inflation have investors cautious ahead of tomorrow’s core PCE print for January.

Ten-year Treasury yields are approaching resistance near 3.90% where we expect mean reversion to kick in and pull yields back.

The no-landing narrative that emerged after the strong January payroll number drives a cyclical recovery theme in equity markets.

The recent resilience of the S&P 500 (SPX) amid the bearish repricing of Fed rate expectations comes from an emerging ‘no landing’ narrative.

As we noted yesterday, we’re discounting the signal quality of the January payroll data given the outsized role of seasonal adjustment factors.  

Let’s review potential CPI scenarios as equity markets will take initial direction from headline CPI, due tomorrow.