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Potentially "hot" April CPI report, testing height Fed pause bar...but so far 2023 is a "game of inches" where bulls gaining. Even global GDP creeping higher.

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Market direction in 2023 feels like a "game of inches" (Al Pacino in Every Given Sunday, see YouTube below). After last Friday's surge post-April payrolls, the equity market has leaked lower over the beginning of the week (flat really). Overall, the bulls have the upper hand as the S&P 500 is up 8%. So while consensus views the macro picture with considerable uncertainty, equity markets have proven to be far more resilient. This is all ahead of the critical (market moving) April CPI, which will be released today (5/10) at 8:30am ET.

Source: YouTube from Any Given Sunday
The safer call is expect April CPI to be slightly "hotter" than Street consensus of +0.3% and April core CPI MoM closer to the Cleveland Fed InflationNOW forecast of +0.45% (trend model). Our basis is the stubborn increase in expected inflation from U Mich inflation survey (+100bp for month). Forecasting CPI is incredibly challenging, so take our comments with a grain of salt and it seems like the "whisper" from our clients is similar. Will a "hotter" April CPI compel Fed to hike in June? Fed futures implies a 12.4% of a June hike, so despite what is a "whispered" hot April CPI, rate expectations are mu...

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