So the CPI print was a miss and as noted, that’s got the dollar and yields on the move – and by “on the move” we mean sharply lower.
Looking out across other assets, gold is markedly higher:
Now recall what we said earlier about bad news still being good news in terms of a weak CPI print making it less likely that the Fed will get too aggressive in normalizing both policy and the balance sheet.
Sure enough, futs are moving up….
#MBNGA…. “make bad news great again”!
And sure enough, the odds of a Fed hike by the end of the year have fallen back below 40% as January 2018 fed fund futs show ~34% odds of a rate hike by year-end after July CPI miss compared to ~ 40% probability before the release.