• Tue. May 21st, 2024

Yields & DXY Lower, S&P 500 Rises

ByRichard Snow

Dec 13, 2022
Michigan Consumer Sentiment Rises: Business Conditions Improve, Inflation Cools

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US CPI Inflation Rises Slower than Expected for Headline and Core Measures:

Headline CPI

MoM: 0.1% (Forecast 0.3%, Previous 0.4%)

YoY: 7.1% (Forecast 7.3%, Previous 7.7%)

Core CPI: MoM: 0.2% (Forecast 0.3%, Previous 0.3%)

YoY: 6.0% (Forecast 6.1%, Previous 6.3%)

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Just How Impactful Have Inflation Prints Been on Financial Markets?

The S&P 500 E-Mini Futures chart shows how influential inflation prints have been in determining not only market direction but also subsequent momentum. On the 13th of September when markets had anticipated a softer CPI print for August, we witnessed an immediate drop (-16% in total) when the 0.2% upside surprise materialized. Then on the 10th of November, the October CPI data produced the cooler inflation print which bolstered riskier markets in the anticipation that the Fed may be forced to tighten less hastily as inflation shows signs of slowing. The index rose nearly 10% off the back of the softer CPI print.

S&P 500 E-Mini Futures Daily Chart

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Source: TradingView, prepared by Richard Snow

As one would expect, the dollar too witnessed significant moves on the back of recent inflation prints (CPI and the Fed’s preferred measure of inflation ‘PCE’). As expected, the hotter than expected print in September drove the dollar with renewed vigor as markets priced in further aggressive rate hikes. The most recent October CPI print of 7.7% has set the tone for the latest dollar selloff ahead of the CPI data.

US Dollar Index (DXY) Daily Chart

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Source: TradingView, prepared by Richard Snow

— Written by Richard Snow for DailyFX.com

Contact and follow Richard on Twitter: @RichardSnowFX



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Image and article originally from www.dailyfx.com. Read the original article here.