Happy CPI Day,

Yesterday, US markets continued to consolidate the recent rally ahead of today’s inflation report. Major US indices were mixed with the S&P 500 falling modestly while the equal weight and small/midcap indices recouped some of the previous day’s losses as yields pulled back. The Nvidia/Wall Street $500B “compute financing platform” was the big story of the day. The asset management partners were some of the best performing stocks in the market and the news broadly helped the AI infrastructure complex. However, the hyperscalers (ex-Meta) were all under pressure as this signaled more spending and competition going forward. There continued to be a steady flow of conflicting Iran headlines keeping a bid under oil markets.

US futures were on the move higher ahead of this morning’s data after a strong round of tech earnings since yesterday’s close. Neocloud companies CoreWeave and Nebius are both up >15% with strong sales and growing backlogs but the pushback is the ever-growing amount of Capex spending. Hardware companies Lumentum and Super Micro are both up >5% after beat and raise quarters. Headline and Core-CPI were both on the screws up 0.1%/0.2% m/m respectively. Energy prices continued to decline though this will likely reverse in August. Within core the components that fell in June did bounce back modestly (apparel/used cars/transportation services). Shelter was muted again at 0.1%. After a little volatility rates are around where they were before the data down 3-4bps across the curve with the odds of a hold in September ticking up slightly to ~58% from 52% yesterday. Equity futures have extended the gains modestly with S&P 500 and R2k futures both up ~0.5%.