Lot of questions this morning about why yields and stocks are higher after a 'dovish' CPI print?
Nomura MD Charlie McElligott has the quick and dirty answer:
the softer / dovish Core CPI did indeed drive some UNWIND of recent “risk-off” bid…but also too, is bringing out some sellers of the recent surge richer on the “Growth / Hard-Landing / Accident Scare,”...
...because none of the components actually do any “dovish good” to the Fed’s preferred Core PCE inflation estimate….in fact, Nomura Econ team revised UP our tracking estimate for Feb by 4bps to 0.321%MoM from pre-CPI est of 0.282%
(“…certain core goods prices which have higher weights in the core PCE price index than in the core CPI price index (e.g. jewelry products) came in stronger than we had expected. Also, legal service prices rose relatively strongly in February”)
