January 12, 2024 - Today’s Producer Price Index report supports the notion that inflation has essentially been defeated. PPI fell to negative headline MoM, 0% core MoM, 1.8% YoY core change, and 1.0% YoY headline change.
When looking at the markets on the day of the October CPI release (Nov. 14) vs. later in the week (Nov. 16), you’ll notice there’s been a big shift in thinking, with ZERO additional rate hikes priced in from the Federal Reserve, signaling their fight against inflation may be coming to an end. A June rate cut has actually been priced in, and there are signs that it’s inching even earlier.
For months, investors have been scaling what feels like an endless wall of worry. Each concern that gets resolved seems to spawn new uncertainties, yet the market has continued its relentless climb higher.
We’ve lived this movie before. Last August, AAII bullish sentiment struck a 52-week high right before the Fed launched its September rate cutting cycle.
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