The Market Brief
Global equities edged higher as traders remained cautious ahead of the closely watched US inflation report, seen as key to shaping expectations for the Federal Reserve’s interest-rate path.
Impact Snapshot
🟥 CPI Inflation - 8:30am
🟥 Unemployment Claims - 8:30am
CPI Scenarios
Similar to our NFP analysis, we think the outcomes are skewed positively as we think Powell’s Jackson Hole speech cemented a 25bp cut for September. We do not think there is a credible threat to the print that would force the Fed to remain paused in September.
Core MoM prints above 0.40%. SPX loses 1.5% - 2%
Core MoM prints between 0.35% - 0.40%. SPX loses 0.5% - 1%
Core MoM prints between 0.30% - 0.35%. SPX loses 25bps to gains 50bps
Core MoM prints between 0.25% - 0.30%. SPX gains 1% - 1.5%
Core MoM prints below 0.25%. SPX gains 1.25% - 1.75%
Context Is King 🎯
This is how, once again, we narrated the perfect framework of context to trade yesterday’s PPI number and shared it with our subscribers hours before the fact.
As mentioned in our context below, when major economic releases come out like the PPI, we wait for the counter-reaction. It's the retail traders that chase the markets in the direction of the economic release.
Most traders are searching for a negative headline to explain why things are bad or why the day turned negative and try to pile up in that direction. You can ask 100 different people, and they will give you 100 different answers after the fact as to why the session unfolded like that.
Well, guess what — all the context and both the absolute top and bottom in the image below were shared before ANY economic number was released.
We share opinions backed by data, reducing the reliance on subjective judgment.
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