Morning Minutes

Stocks Rally as US CPI Drops to 5.0% and Achieves a Key Milestone




US index futures have taken off following the release of a benign and better than expected US inflation report. Index futures are currently up 0.6% to 1.0% with NASDAQ futures leading the charge.

The US consumer price index (5.0% vs street 5.2% and previous 6.0%) came down in March and beat expectations returning to 5.0% for the first time since May of 2021. This significant easing in inflation pressures also means that after a year of monetary tightening, Fed Funds (which started at zero in early 2022) and CPI (which peaked at 9.1% in June of 2022) have finally essentially met in the middle. Investors have taken this achievement as giving the Fed scope to pause its interest rate hiking program at any time and potentially limiting the number of potential additional hikes this year to one or two at most.

The Bank of Canada releases its latest interest rate decision at 10:00 am EDT and it is widely expected to remain on hold and keep its overnight rate at 4.50%. In the statement, investors may look for commentary related to inflation and the economy. Mention of the overseas banking environment is possible and may potentially be coupled with supportive comments about the relative strength and stability of the Canadian banking sector.  

Corporate confession season remains quiet. Earnings season starts tomorrow with results due from Delta Air Lines, followed by the big bank kickoff on Friday with Citigroup, JP Morgan Chase, Wells Fargo, UnitedHealth, Blackrock and others scheduled to report results.

European markets are up this morning with the FTSE gaining 0.6% and the Dax rising 0.2%. Commodity and currency trading is mixed with several markets continuing to trade around big round numbers. WTI Crude Oil is steady trading near $81.50, Copper is down 0.7% trading near $4.00/lb, Gold is up 0.2% trading near $2.025/oz, Bitcoin is down 0.9% trading near $30,000.

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Colin Cieszynski, Chief Market Strategist

Colin Cieszynski, CFA, CMT
Chief Market Strategist
+1 (647) 282-4428

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