The major US stock indices are trading higher reaction to the CPI data this morning (a sigh of relief). The headline CPI rose 4.9% pushed higher by used car prices which rose 4.4%, gasoline prices rose 3.0% and shelter rose 0.4%. Shelter year on year remains elevated at 8.1%. Analysts and traders still look for a settling down of that measure of inflation as it contributes around one third to the overall CPI.

A snapshot of the market segments into the open is showing:

  • Dow industrial average up 142.28 points or 0.42% at 33704.10
  • S&P index up 29.99 points or 0.73% at 4149.17
  • NASDAQ index up 134.05 points or 1.10% at 12313.60
  • Russell 2000 is up 20.10 points or 1.15% at 1769.78

US yields are lower in response to the hopes for lower inflation going forward:

  • 2 year yield 3.955% -6.8 basis points
  • 5 year yield 3.418% -7.8 basis points
  • 10 year yield 3.461% -6.0 basis points
  • 30 year yield 3.808% -4.1 basis points

At 1 PM ET, the U.S. Treasury will auction off 10 year notes. Tomorrow they will auction off a 30 year bonds. Yesterday the 3 year note auction went very well with lots of international demand (tail was -2.8 basis points with a large bid to cover ratio).

The USD has moved lower, but is retracing some of the declines.

  • EURUSD moved up to test the 100/200 hour MAs at 1.1003 to 1.1008 area. The high reached 1.1006. The braces moved back down to 1.09744 currently
  • USDJPY moved below the 100 are moving average 134.777. That is now risk for sellers. The 100 hour MA was support during trading yesterday. The 134.713 and found willing sellers against that MA level. The current price trades at 134.54.
  • GBPUSD price rise took the pair to the highest level since April 26, 2022 (above 1.26653). The high price reached 1.26793. However, that break is a failing and the price is moving back down toward the 100 are moving average 1.26161. The low price of the high just reached 1.2621 – 5 pips from the 100 hour moving average - and has seen a bounce back toward 1.2633. The 100 hour moving average seems to be attracting some buying interest. A break below would not be good from a technical perspective for those dip buyers