Let’s Talk When It’s a Trend
The Fed needs to see more inflation data like this.
At 1:30 p.m. ET the S&P 500 read 5,299.20, up 52.52 points, or almost exactly 1.00 percent, for the day.It looks like almost everybody’s getting what they want this week.
The May rally is intact. The Consumer Price Index did in fact cool in April. Retail sales were softer than expected, though, but in this context that’s OK, right…
And the major indexes are all near new highs.
Investors, traders, and speculators are pricing in a rate cut that portends the earnings slowdown they’ll price out in a few months.
The other way to look at it is that fresh new highs give way to fresh new highs. That’s just the way the long-term trend and its underlying math work.
And this is also the first time this year that CPI wasn’t hotter than forecast.
The fed funds futures market is now pricing in two rate cuts in 2024, resolving tension between one and two cuts as of Tuesday.
Core CPI rose 0.3 percent in April, down from 0.4 percent in March and the smallest increase since December. It was 3.6 percent on a year-over-year basis, the lowest rate since April 2021.
On Tuesday, Federal Reserve Chair Jerome Powell said he and his colleagues “need to be patient and let restrictive policy do its work.”
It will take more incoming data to convince them, certainly.
But, for now, it looks like at least a little work is getting done.