- Moving the markets
Stocks continued last week’s momentum to higher ground, as traders are still convinced that peak inflation is in the rear-view mirror, and that future rate hikes might be smaller because of it. That goes against Fed head Powell’s repeated assertions that he remains “strongly committed” to bring down inflation.
No matter how the CPI number will turn out tomorrow, the Fed meeting on Sept. 20-21 looms large with expectations being that they will deliver the 3rd consecutive 0.75% rate hike. In the meantime, a softer than expected CPI reading could maintain bullish momentum and soon create a new Domestic Buy signal for our Trend Tracking approach. At this time, we are not quite there yet, as you can see in section 3 below.
As is usually the case, no major rebound can materialize without a solid short squeeze. That was the case over the past 4 trading days, as the most shorted stocks got squeezed by some 14% off their lows, as ZeroHedge posted.
Bond yields rallied with the 10-year adding 6 basis points to close at 3.36%. The US Dollar tanked again, which allowed Gold to score another winning session above its $1,700 marker, despite a late day sell off.
With the CPI on deck tomorrow, traders may again ignore the Fed’s latest warning that one month’s report will not sway them in their fight against inflation.Read More