December Inflation Preview: What Will It Take To Trigger A Fed Rate Cut In Q1 2024?
Portfolio Pulse from Piero Cingari
The upcoming December inflation report is critical for the Federal Reserve's rate decisions in Q1 2024. Economists expect a slight increase in annual CPI to 3.2% from November's 3.1%, with core CPI predicted to decline to 3.8% from 4%. Goldman Sachs projects slightly higher rates, while Bank of America aligns with consensus and suggests a potential rate cut in March if inflation is softer than expected. November's CPI report aligned with forecasts, leading to gains in SPY and QQQ, and a rise in TLT as Treasury yields fell.
January 10, 2024 | 2:45 pm
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NEUTRAL IMPACT
QQQ, which tracks tech-heavy stocks, increased by 0.8% after the November CPI report. The December inflation data may similarly affect QQQ, especially if it influences tech sector investment sentiment.
QQQ's short-term price movement could be swayed by the December CPI report, as it may affect expectations for tech sector growth and Fed policy.
CONFIDENCE 75
IMPORTANCE 60
RELEVANCE 70
NEUTRAL IMPACT
SPY gained 0.5% following the November CPI report, which met expectations. The December report's impact on inflation expectations may influence SPY's performance in the short term.
SPY's performance is closely tied to market sentiment regarding inflation and Fed rate decisions. The December report could maintain, increase, or decrease investor confidence, affecting SPY's price.
CONFIDENCE 75
IMPORTANCE 60
RELEVANCE 70
NEUTRAL IMPACT
TLT, which reflects long-term Treasury bond prices, rose by 0.3% following the November CPI report. The upcoming inflation data could impact TLT as it may alter bond yield trajectories.
As inflation data affects Treasury yields, TLT's price could be impacted by the December report. A higher or lower than expected CPI could lead to volatility in bond prices.
CONFIDENCE 75
IMPORTANCE 60
RELEVANCE 70