The consumer is consuming! In another blow to the Fed’s attempt to cool inflation, the US consumer remains strong in the face of rising interest rates and persistent inflation. After seeing a welcome decline in retail sales for the months of November and December, the consumer rebounded strongly in January as retail sales jumped 3%, cruising past the estimated 2%. Treasury rates reacted as expected, climbing higher and approaching levels last seen at the end 2022. We are looking at the US5Y (4…

Back in July 2001 my family and I were heading to the local theatre for movie night. We were going to see the new Steven Spielberg movie and as fan of many of his previous directorial releases, most notably Jaws, everyone was excited. The movie was A.I. Artificial Intelligence, and it remains today, in my opinion, one of the worst movies ever made. Was Google’s release of its AI search assistant Bard as bad? No, but Mr. Spielberg’s movie did not wipe $100bn worth of market cap away. Bard’s inc…

It may be cold outside, but that’s not enough to cool the scorching hot job market. The markets were shocked today when the change in nonfarm payrolls reported a gain of 517k, blowing out the estimate of 188k. The unemployment rate is now 3.4%, the lowest since 1969 while the ISM services index jumped to 55.2. The case for the Fed to make an early pivot seems to be fading as economic data remains strong and inflation lingers. Rates skyrocketed (US10Y 3.53%) on the backs of the job data. CME data now shows some traders are predicting a Fed terminal rate above 5% and others pushed their cut predictions back to December 2023.

Yawn! We close out the week with the most in line economic data we have seen in a while. With the Fed in the middle of their quiet period, many looked to today’s PCE data to provide a better understanding of what the Fed may be planning for the upcoming FOMC meeting next Wednesday. The PCE core deflator YoY reporting in line with estimates (4.4%), left traders in limbo while market movements lacked conviction in both directions. The SPX (+0.25%) remains within its current range with resistance at the 4100 level. While PCE data is still more than double the Fed target, they did see some data points moving in their favor.

Lately the markets have been singing the same ole tune, Steelers Wheel “Stuck in the Middle with You” seems appropriate. SPX continuing to stay in bounds of the latest range with upside resistance of 4100 and downside support of 3800, closing slightly above the 200d (3968). Markets erased almost all this weeks’ earlier losses with both the SPX (+1.89%) and NDX (+2.86%) taking advantage of elevated volumes. The NDX caught the bigger wave today and outperformed, after NFLX (+8.46%) reported subscriber growth of 7.66m, GOOGL (+5.34%) announced 12,000 job cuts and MSFT (+3.57%) closed in the green for the first time this year.

Survey says……6.5% YoY! That’s right folks, CPI continues to trend in the right direction and reports in line with estimates. Traders have been waiting with bated breath since the beginning of the new year, hoping to see a CPI print that could bring some positive energy back to the markets. While today was a welcomed improvement in CPI, most were hoping to see it come in below estimates and the market’s reaction was in line with these expectations. On top of the data, we heard from multiple Fed speakers today.

The markets continued the trend of “bad news is good news”, with all sectors closing in the green on the back of today’s ISM data. With ISM services coming in at 49.6 (down 6.9 points), it marks the first contraction since May 2020 and was the main fuel for today’s rally. Traders seem to be taking this ISM miss and a slowing in average hourly earnings (MoM) as a sign the Fed will soon pivot from rate hikes. Yields fell dramatically with the US10y retreating to 3.563%, the DXY (-1.08%) closed below 104, and the S&P(+2.28%) pushed to 3895.

Markets are no longer in the holiday spirit as they fell for the third day in a row. The CPI numbers from Tuesday were not enough to push them higher into yearend as continued hawkish rhetoric for the Fed has rattled the markets. Investors saw early week gains wiped out as the SPX (-1.1%) closed in the red and below its 50d (3863). Global PMI data this morning provided no relief as all came in below surveyed estimates, adding to the argument that a recission is on the horizon.

A lack of economic data during today’s session led to a choppy day in the markets as the S&P 500 closed down for the fifth day in a row. This will be the sixth time this has happened this year, as it holds just above the 100d avg. Making the biggest moves today were US treasury yields. The 10yr (-3.1%) closed at its lowest level since September.

Markets fought their way back from the lows today to hold onto the gains from yesterday’s post Powell rally. Another round of economic data was the focal point throughout the day as PCE and ISM reported for the month of October. PCE core data MoM, which Powell has stated is his main metric for current inflation, posted a sequential decline.