Daily Alert – Tuesday 14th February 2023: All eyes are on Today’s US CPI, 1pm UK-time
Today is all about US CPI. There is a disjoint between the bond market and equities. The bond market sees bonds being sold off and as such the bond yield and the USD have been rising on the expectation of a hawkish Fed keeping rates higher for longer in the fight against inflation.
The equities market is rising, showing a belief that the worst of inflation is over and the interest rate will not go so high nor for so long.
Both parties cannot be correct.
We may find out one way or another with US CPI today at 1pm UK-time. If the print is very much different to the expectation, I may trade the event itself, rather than waiting for the close of the daily candle tonight. I do NOT recommend you do this as volatility can take a trade out for a lot more than the stop loss.
It is also worth remembering that we have CPI, Core CPI, month-on-month and year-on-year, and not everyone agrees which measure is the most important. So, there are plenty of opportunities for no clear result and each faction, bonds and equities, to take from the data what they want. Behavioural economics. You’ve got to love it.
I’ll be back tomorrow.
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