Stocks are catching a bid as it seems we’re in the process of burying the “Inflation Nation” narrative. Treasuries, gold, and silver are mixed, while crude oil is rallying. The dollar is dropping.
On the news front…
Today is “CPI Day” – and investors got just what they were hoping for in the data! The headline number was weaker than expected, while the core number was in-line with forecasts. Plus, the year-over-year figures continue to cool.
That means the Federal Reserve will likely stand pat with interest rates at this week’s meeting. While we won’t get the actual Fed announcement until tomorrow, rate futures markets are now pricing in virtually no chance of a move. Arguably that should continue to be bullish for stocks, Treasuries, and gold, but negative for the US dollar.
Meanwhile, China is pursuing an entirely different path than most of the developed world. The People’s Bank of China actually CUT its seven-day repurchase rate by 10 basis points. The move is designed to spur lending and prop up that country’s economy in the wake of a raft of disappointing data.
Finally, in the “I guess you can call it progress” department, the National Federation of Independent Business (NFIB) index rose to 89.4 in May. That was up ever so slightly from 89 in April. On the other hand, April’s reading was the lowest since January 2013. Other components of the report weren’t as positive, with sub-indices tracking credit conditions and sales expectations both dropping.