Softer CPI - Reawaken the bull?

The story about inflation has evolved multiple times ever since we are spooked by it.

When it was too high, markets tank

When it is reduced less than expectations, markets tank.

These days, if it rises by a bit and less than expected, the markets rally.

This time is no different than the past few months.

Don't get me wrong, it is good to see softer CPI growths. It's just the market reaction that is funny as it is too forward-looking.

Lower CPI growth than expected means higher interest rates are working their magic to bring down inflation. The work continues to be in progress.

The expectation is of course, that the Feds will try to be more dovish in the interest hikes.

However, this descending CPI comes with its caveats.

If food and energy are taken out of the equation, overall inflation is still 4.8% from a year ago and 0.2% on a monthly basis.

It is still high.

So based on this, the Feds might not be too eager to pause or even reduce the sky-high interest rates.

DISCLAIMER
The information available in this article/report/analysis is for sharing and education purposes only. This is neither a recommendation to purchase or sell any of the shares, securities, or other instruments mentioned; nor can it be treated as professional advice to buy, sell or take a position in any shares, securities, or other instruments. If you need specific investment advice, please consult the relevant professional investment advice and/or for study or research only.