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US stock markets are reflecting some trepidation ahead of the latest set of US inflation figures due later today. Fed rate hike projections for the remainder of the year have been sharply unwound on the back of recent US data misses. While the Fed has reaffirmed its message that it stands willing to tighten further to beat inflation, traders have assigned a lower probability to any further hikes with pricing now shifting in favor of expecting a rate cut towards the end of H1 2024. However, today’s data holds the potential to turn that pricing on its head if we see any major upsets.
 

Today’s Forecasts

On the numbers front, the market is looking for annualized CPI at 3.6%, up from 3.2% prior. While an uptick in CPI will be unwelcome, it likely won’t be enough to send September hike pricing soaring. However, if we see an upside surprise on that figure, taking us back up towards 4% this might well split market expectations once again, leading tech stocks firmly lower near-term.
 

Focus on Core

Core CPI will be closely watched. Given the uptick in energy prices, headline CPI is forecast to rise. However, it would likely be an upside surprise in core inflation that could upset the apple cart ahead of the September FOMC. Alternatively, if we see CPI undershooting forecasts today, that should cement an “unchanged” decision this month, leading the USD lower and allowing the Nasdaq room to rebound higher.
 

Technical Views

Nasdaq

(Click on image to enlarge)

For now, the Nasdaq is holding back above the 15177.5 level, sitting around the middle of the bull channel. While this level holds, the focus is on a continuation higher and a fresh challenge of the 16010.4 level highs. However, below here, focus shifts to a test of the bull channel lows next, ahead of deeper support at 14288.2. 

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