Both the Treasury and equity markets breathed a collective sigh of relief as December’s CPI data largely met expectations, bolstering expectations that the Federal Reserve may be able to lower rates later this year.
The core CPI—ex food and energy—increased by 0.2% after rising 0.3% four straight months. From a year ago, it was up 3.2%. This data was 0.1% better than expected and was the first stepdown in the rate in six months.
The overall CPI met expectations.
Also adding to yesterday’s bullishness were the earnings reports from several bulge bracket banks. The reports exceeded expectations, loan loss reserves and non-performing assets were encouraging, and net interest income rose.
What will happen today?
Last night the foreign markets were up. London was up 0.69%, Paris up 2.03% and Frankfurt up 0.28%. China was up 0.28%, Japan up 0.33% and Hang Seng up 1.23%.
Futures are bifurcated as Dow futures are down 02.5% and NASDAQ futures up 0.25%. BAC exceeded estimates while United Healthcare missed. The 10-year is off 4/32 to yield 4.68%.
Kent Engelke
Chief Economic Strategist Managing Director
The views expressed herein are those of Kent Engelke and do not necessarily reflect those of Capitol Securities Management. Any opinions expressed are statements of judgment on this date and are subject to certain risks and uncertainties which could cause actual results to differ materially from those currently anticipated or projected. Any future dividends, interest, yields and event dates listed may be subject to change. An investor cannot invest in an index, and its returns are not indicative of the performance of any specific investment. Past performance is not indicative of future results. This material is being provided for informational purposes only. Any information should not be deemed a recommendation to buy, hold or sell any security. Certain information has been obtained from third-party sources we consider reliable, but we do not guarantee that such information is accurate or complete. This report is not a complete description of the securities, markets, or developments referred to in this material and does not include all available data necessary for making an investment decision. Prior to making an investment decision, please consult with your financial advisor about your individual situation. Investing involves risk and you may incur a profit or loss regardless of strategy selected. There is no guarantee that the statements, opinions or forecasts provided herein will prove to be correct. If you would like to unsubscribe from this e-mail distribution, please reply to this e-mail and indicate that you wish to unsubscribe in your response.
