As soon as the CPI print hit (and missed), our assessment was simple:
And for those who have wisely chosen not subject themselves to our profane Twitter feed, here’s the expanded version:
ok: unload your long USD positions, get long USTs and stocks, then go ahead on to the bar.
algos will take it from here.
— Walter White (@heisenbergrpt) October 13, 2017
It’s early yet, but we just wanted to remind anyone who might still be under the impression that this isn’t all about central bank expectations what’s really going on.
Here’s the dollar and yields (yellow is CPI):
And here’s futs (again, yellow is CPI):
“Bad” data is actually “good” data for risk assets and when it comes to “bad” data, no “bad” data is “better” than a CPI miss, because that gives the Fed a reason to be dovish. Unless of course they write it off as “transitory” in an effort to covertly curb the very same dynamic that makes equity futs jump on lackluster econ.
And don’t ask any questions…