Investors Fade the Allegedly "Hot" CPI Report

It looks like investors are calling "BS"

Highlights

• Geopolitics, earnings and mixed macro data take center stage

• Markets recognize the flaws in yesterday’s “hot” CPI report

• Wonky seasonals skew initial claims

• More evidence from Indeed on the weakening labor market

While We Were Sleeping

Yesterday’s market action was notable on a few fronts. Very little change in equities but beneath the surface, there was weakness in the Russell 2000 (-0.8%), Financials (-0.6%) and Transports (-0.4%). The Nasdaq continues to face steep resistance at the 15,000 level. Despite the Fed’s Loretta Mester continuing the efforts of the central bank to push back against market pricing of a rate cut in March (calling it “too early”), the bond market is calling its bluff with 2-year Treasury note yields sliding -11 basis points to 4.25% and the 10-year by -5 basis points to 3.97%.

Markets are also trying to digest what now appears to be a string of layoff announcements emerging in the Tech sector… shades of early 2023. Indeed, in recent days, we have been on the receiving end of job cuts out of Amazon, Google, Unity Software, Discord, and Citrix to name a few. While it may not be showing in the official data just yet, this is not a surprise given the leading indicators beneath the surface of recent employment reports have been showing cracks for some time.