2024-04-07 09:00:00 ET
Summary
- The March CPI report is the first test of the Fed's "inflation bump thesis", and with it, the window for the first cut is closing.
- We could be in the early stages of commodity price driven inflation, which could accelerate if the Fed cuts prematurely.
- The stock market is facing a near-term deep correction as the Fed's cuts are priced out, and longer term the recessionary bear market.
The first test of "the inflation bump thesis"
The US Bureau of Labor Statistics is set to release the CPI inflation numbers for March on April 10th. This will be a pivotal data report with significant implications for the financial markets.
Specifically, the core CPI inflation data was "hot" in January and February, rising at 0.4% MoM, which was above expectations, and also well above the Fed's 2% inflation target - monthly inflation has to come at 0.2% to be consistent with 2.4% annual inflation, which is the upper limit of the Fed's tolerance for core CPI....
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For further details see:
The March CPI Preview - Watch Out For The Commodity-Driven Inflation