🎲Good economic data, bad equity outcome💸

The latest economic data of PPI and Initial Jobless Claims are out of the oven. These two pieces of data drove major equity lower as investors digested the probability of higher rates as slowing inflation is believed to have lost its momentum. 

Indeed, PPI rose sharply as producers faced higher input costs. It wasn’t a surprise, given the higher energy cost, but the jump caused indigestion in expectation. Likewise, the strong initial jobless claims reflect an underlying tight labour market, and that is set to feed into inflationary pressure. 

🎙Fed speakers talked down the market🔭

As the trading continued, major indices sank further into the red. Fed member Bullard supports a 0.5% rate hike in the next FOMC meeting in March. The same tone was sung by Mester, who also weighed the risk and costs and threw weight on higher interest rate hikes. 

Such speeches echoed the pain and drama as equities retreated sharply towards the end of the trading session. Fed’s action continued to drive the market as earnings started to take a back seat (though still important). 

Treasury markets reacted swiftly, with both 2-year and 10-year Treasury yields rising, adding pressure to long-duration stocks, especially for Nasdaq. Such activity of the yield curve hints that investors are coming to terms with the fight against inflation as a longer-term task. 

🧮What are our dishes today? 🗽

At 9.30 pm, we will have FOMC Barkin speaking. Then we will also have the Import Price Index which we expect a decline of 0.2% from a drop of 2.6% in the prior period. 

FOMC Member Bowman will speak at 9.45 pm, and any form of the hawkish statement will depress any rebound.