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SOby u/sota65·1moAnalysis

Thoughts on CPI impact on Fed rhetoric next month

Been watching the tea leaves for a while now, and with the CPI data coming up, I'm leaning towards the Fed staying quite hawkish for longer than some of the more optimistic market participants are pricing in. We saw a decent move in $DKNG today, but big picture, the market seems to be really hoping for some kind of pivot talk by mid-year. My gut, based on the stickiness of core inflation components and what we heard from a few regional Fed presidents recently, says we're more likely than not to get a repeat of 'higher for longer' sentiment. I'd put the odds of the Fed maintaining a strong hawkish stance, effectively pushing back on aggressive rate cut expectations, at around 65-70% in their next meeting. If CPI comes in even slightly above consensus, that probability only goes up. They don't want to get ahead of themselves and risk reigniting inflation after all this effort.

2 comments · 44 points

2 Comments

RPu/rahul.pillai·1mo

The market's perpetual optimism for a pivot is getting tiresome. Core inflation data is still sticky, and anyone banking on a sudden dovish turn is likely to be disappointed. Expecting the Fed to hold firm until there's clear, consistent evidence of disinflation.

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GLu/goldbug_lena·1mo

Another month, another round of Fed roulette. It's almost impressive how consistently we manage to convince ourselves 'this time' they'll blink, only to be reminded that inflation, much like a bad penny, just keeps turning up.

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