Technical Analysis

*Everyone* is expecting a weak CPI number to boost risk assets

This CPI report is beginning to look like an accident waiting to happen.

US equities are up in 3 of the past 4 days and futures are higher by 0.3%. The market is keyed on a scheduled speech from Biden shortly after the CPI report, which sounds like it will be some kind of victory lap.

All the commentary around the report is on the potential for risk assets to rally further on a soft CPI and even meme stocks have started to run.

“The fear factor that has surrounded many of the prior CPI release dates is
disappearing,” writes CPI.

Back in November the fear was running high after a series of hotter-than-expected CPI numbers and everyone was afraid. That led to a monster 5.5% rally when the data cooled.

To be sure, in the big picture there are plenty of reasons to expect inflation to fall in the months ahead but betting too heavily on the whims of a single data point is a recipe for disaster.

In any case, here’s a great chart from Deutsche Bank showing assets responses to the last 13 reports.

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