CPI retraced to 8.3% from 8.5%. There are chances this is the peak, and that has bullish impact on the market.
CPI has retraced (a small bit)
Just a few minutes ago CPI for April was released at 8.3%.
A relaxation of CPI pressures will do a lot to support the market and make the Fed’s job easier.
The Fed model shown above highlights how growth post-Covid would have led to a fall in CPI already a few months back.
If Russia sanctions are priced in and supply chain issues relax, this could be the peak of inflation and lead to a stabilisation in Fed policy.
If we see the light at the end of the tunnel for inflation,Treasuries will become an interesting buy opportunity. And if Treasuries rally, this will help SPX too.