TJA7X88
02-16

Yes - in market pricing and sentiment.


Market pricing (Fed funds futures / option-implied probabilities) has shifted noticeably toward earlier and/or more cuts later this year after CPI came in below expectations: headline inflation at ~2,4% YoY and a weaker monthly print. Traders have increased the odds of a June rate cut, with some pricing in a ~50-80% chance of at least one cut by mid-year.

80% Rate Cut By June: Will S&P 500 Extend Gains?
US January CPI surprised to the downside, with headline inflation rising just 0.2% MoM (vs. 0.3% expected) and 2.4% YoY, the lowest since last May. Core inflation also came in softer than forecast, pushing market pricing for a Fed rate cut before June to 80%. Treasury yields slipped as traders pulled forward easing bets, while equities initially cheered the cooling inflation print. Does softer CPI reflect higher possibility of rate cuts? Will the S&P 500 extend gains on rate-cut optimism?
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