Cooler CPI Bought Time. It Didn’t End the Cycle.

One softer print has pushed the next hike further out. It hasn’t removed the need for one.

US CPI came in cooler and the market did what it should, front-end yields fell, the odds of an immediate Fed hike were cut, and equities got some relief. The print mattered for the immediate. The leap is a little far for a call of softer month to inflation is beaten.

The better read is in the shape of the repricing. Near-dated SOFR rallied, but the deferred curve still embeds about 45bp of tightening into next spring. Australia tells the same story in smaller size, with roughly two-thirds of a 25bp hike still in the bank-bill curve by year-end. Both central banks have more time. Neither has an all-clear.

This is the value of looking across the dashboard found on www.globalmacromethod.com rather than stopping at the headlines. A release tells you what just happened. STIRs, nominal and real yields, equity breadth and inflation-sensitive equities tell you what the market believes about the regime. Right now, those signals do not line up with a clean disinflationary glide path.

Below, I work through what the CPI print changed, why the economy remains harder to slow than the rates narrative implies, where hikes remain live, and why the same AI complex supporting growth is also making the equity market more concentrated than the headline indices suggest.

Enjoying what you’re reading? Subscribe to unlock the full article and support our independent research. Paid subscribers also receive exclusive access to additional tools, analysis, and resources at www.globalmacromethod.com.