Thoughts on CPI and Fed next week

Starting to get a feel for how the market is positioning ahead of next week's CPI print and the FOMC meeting. I'm leaning towards the idea that we'll see core CPI come in slightly hotter than expected, maybe 0.4% MoM, largely due to lingering services inflation. If that happens, the market is probably underestimating the Fed's willingness to keep their foot on the brake. I'd put the odds of a more hawkish tone from Powell — perhaps signaling a higher 'for longer' stance or even hinting at the potential for one more hike later in the year — at around 60%. This could put some pressure on risk assets, and I wouldn't be surprised to see a retest of recent lows for broader indices. On the flip side, if CPI surprises to the downside, say 0.2% MoM core, then the relief rally could be quite strong, pushing things like $RBLX back towards the top end of its recent range. But my base case right now is that the path of least resistance for the Fed remains cautious, meaning any signs of inflation persistence will be met with a firm hand.