Despite the Fed's initial aggressive stance on cutting interest rates, the 10 year treasury yield is running back up towards the peak of the Fed's rate hikes. At the same time, we are 133 days into the yield curve eversion meaning the curve is no longer inverted. The divergence is growing steadily as well, as the 10 year yield remains much higher than the 2 year so far. This move has almost negated everything the Fed worked to unwind over the past several months of interest rate cuts.

The main action to bring rates down is cutting rates, and this week's CPI data will show us whether or not another cut is a good idea.

-Frank

This commodity can no longer be ignored as the EdgeFinder places its score as high as +14 this morning, one of the strongest readings on our list for some time. Some factors that can affect oil’s score today will be from trend if we get a pullback at these highs or inflation if CPI comes in missing expectations. Since oil’s inflation score is already +2, a miss is the only event that can change the score. If we do not see a miss, oil’s price may break through the $77 top and reach towards $80.

-Frank

Data from the EdgeFinder
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Stocks are trading slightly higher in the futures market as we are 15 minutes away from the first CPI report of the year. There is nothing to interpret from this morning’s green candle as the numbers have not come out yet. What the market needs to see is a miss from Core and y/y CPI. These are two factors that can help get SPX500 back to a bullish reading. A hotter CPI report could break the index back to the lows of November of last year. If we get a miss, price may attempt another test at the top of the bullish flag pattern on the 1D timeframe.

- Frank

Data from the EdgeFinder
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