It is Amazing how well this Stock Market is Trading Technically
Look below; the trend is obvious:
- Food has been slowing 2 months in a row
- Energy tanking, matching the roundtrip in oil, diesel and gasoline, and even natural gas
- Used cars falling -36% rate
- Shelter slowing visibly and now matching the tanking of market-based measures of home prices and rents.
- Medical care services is falling at -40% rate and are repeatable due to annual adjustment (see our other CPI reports)
- 1M annualized core CPI now 2.4% vs. 3.6% last month
- 3M annualized core inflation is now down to 4.18% (it was 5.56% last month)
- Do we think Fed still needs to be banging away with +75bp hikes? Nope
- 2-yr yields down 19bp to 4.17%, the lowest since Sept
- If Fed raises +50bp on Dec 14, Fed funds will be 4.33%
- 2Y less Fed Funds by the end of this week will be BELOW ZERO
- Market saying Fed might be DONE after December
- Thus, we see support for the YE rally
- This is a dovish surprise and argues for a dovish change in Fed’s reaction function.