Headline CPI came in at -0.4% MoM vs -0.1% consensus. Core flat vs +0.2% expected. July hike odds dropped from \~50% to 16% overnight. $SPY and $QQQ loved it, obviously.
But here's the thing, the miss was almost entirely energy. Gasoline down 9.7%, energy component down 5.7%. Strip that out and the picture gets murkier fast. Shelter is still running around 4.25% annualized. That's not "mission accomplished" territory.
Checked the moomoo community reaction and the bond trade was interesting, 2Y yield dropped 8.8bp to 4.19%, $TLT catching a bid. Makes sense if you're fading the hike cycle. But Warsh basically said don't read too much into one print, which I think is the right call.
FOMC July 28-29 is the next real catalyst. Then August 12 for the next CPI read. Imo the long-duration + quality growth setup ($NVDA, $TSM, $VRT over $IWM) still makes sense here, but I'd be cautious chasing small-caps on this single print.
Anyone else leaning into bonds here or fading this rally into the FOMC?
