Consumer Prices, Stocks-Bonds Uncoupling?

Good morning contrarians! Welcome to the Daily Contrarian, our morning look at events likely to move markets in the day ahead. Today is Tuesday, Feb. 13, 2024. The Bottom Line segment of today’s podcast starts at (5:09) for listeners who want to skip ahead.

State of Play

Stocks didn’t move much yesterday during a pretty blah session. As we look at our board of indicators at 0610, risk appetite appears mixed:

• Stock index futures are pointing to a lower open with tech leading the drop. The Nasdaq is down 0.6% with S&P 500 futures down 0.4%;

• Cryptos continue their ascent. Bitcoin is up 4% to trade around $49,900. So getting close to the magical $50k level there, the same week that the S&P surpassed 5k;

• Commodities are showing some signs of life with WTI crude oil up 0.7% to trade around $77.50/barrel. Copper is up 0.5%;

• Bonds are unchanged. The 2-year yields 4.48% with the 10-year yielding 4.18%.

Economy

Inflation returns to the focus today. The Consumer Price Index is out at 0830. Economists who were surveyed expect a 0.2% month-over-month increase to headline CPI, a slight improvement over last month’s 0.3%. That would drop annualized headline CPI to 2.9% from 3.4%

Core CPI, which excludes food and energy and is therefore seen as a ‘purer’ gauge of inflation (not least by the Fed), is expected to come in at 0.3% MoM, the same as last month, and 3.8% year-over-year, a tick better than last month’s 3.9%.