US CPI Miss Triggers Confusing Market Reactions Across Equities and Bonds

Yesterday’s session has seen some bizarre reactions to an all-around better-than-expected data – As a reminder US Headline came in almost as expected (0.287 unrounded Headline vs 0.30% expected).

The number was however the more welcomed surprise, coming in at 0.2% (0.227%) vs 0.3% expected – This is what the FED prefers for their decisions.

Still, an initial slow but upwards reaction got followed by some selloff in Bonds hence higher Yields (unusual when misses, even slightly) and a similar turn in Equities: The started the fall which trickled down to then the more resilient towards the afternoon. These market flows will need to be followed closely as such price action is not a good sign for risk-assets. (Except for cryptos which performed well).

As the title explains it, it’s all about the , which started off more than mixed at the data release, before exploding towards the US Equity Open.

The USD closes higher by around 0.70%, with the hitting monthly highs of 98.70.

The Canadian also came out as expected, still up on a year-over-year basis (1.9% vs 1.7% last month) – This unloads further the chances of more by the Bank of Canada.

Most commodities finish down or mixed as the US Dollar didn’t leave much for others on the table – Yesterday will be key to track if this move as some legs to it.

In the meantime, sentiment appears to have taken a hit, at least in terms of Technicals.

Daily Cross-Asset Performance

Source: TradingView

The winners of the day are the , continuing the past two weeks’ trend and the US Dollar from which the rally killed the fun of many other Major currencies (see below) and assets.

Even finished down on the session, but the entire altcoin market did not care too much.

A Picture of Performance for Major Currencies

Source: OANDA Labs

The session started very quiet before the US Dollar took back the throne after the publication of the US CPI.

One thing however was the relative strength of the in this trend which will have to be kept close as for example is forming some potentially interesting patterns.

Another session, another losing day for the – its underperformance has been remarkable which may prompt some reactions from the BoJ. In the absence of such, expect the ongoing USD/JPY Breakout to continue (Yesterday’s session saw the break of a 2-months range).