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US stocks are soaring today as traders look to the upcoming US CPI print to confirm a Fed pause this week. Headline CPI is projected to print at 4.1% YoY, down from 4.9% prior. Looking at the monthly readings, headline CPI is forecast at 0.2% down from 0.4% prior while core CPI is expected unchanged at 0.4%.  If inflation is confirmed at these levels, the Fed is widely expected to hold rates unchanged at the FOMC tomorrow. Additionally, any unexpected weakness will be expected to feed into a more neutral set of forward guidance from the Fed which should keep stocks underpinned near-term.
 

Risks Around Today’s Data

Given the signalling we’ve seen from the Fed recently, as well as the built-up level of market expectation. It would likely take a sharp upside surprise today to upset the consensus view. Given that core inflation is expected unchanged from last month, this might be where the risk lies. If core inflation is seen spiking last month, the Fed would likely still push ahead with a pause this month though the forward guidance might take a more hawkish slant which ultimately curtails any upside in stocks.
 

Technical Views

Nasdaq

The recent correction lower in the Nasdaq found strong support into the 14288.2 level with price since turning sharply higher. The index is now testing the bull channel top and with momentum studies firmly bullish, the focus is on a continuation higher towards the 15177.5 level next. 

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