The CPI and PPI data came out over the last two days…..and things are confusing to say the least.

Let me explain…

When it comes to reported economic data, the market is usually all about judging expectations vs. reality.

Yet…..that is not what we saw over the last couple of days!

The CPI came in on Wednesday with core inflating at 0.3%, which is higher than the expected 0.2%. The overall inflation numbers were at 4.3%, matching expectations…

What did the PPI do the next day?

Same story…

It came in at 0.7% when seasonally adjusted, which is 0.3% higher than the market’s expectations!

With the way market’s have reacted over the past two years, you would expect a little bit of a stock beatdown over this news.

After all, the market has been trying to figure out whether there will be another rate hike by the end of the year…

And inflation data is a massive tool that the FED uses to make their decisions.

Yet…..that’s not the case at all!

The SPY was up more than 1% over the past two days…

On the surface this doesn’t make much sense.

You would expect a flat market at the very least, with a likely skew to the downside…

The fact that we didn’t get that tell’s us something about where the market’s headspace is at!

Here are a few potential beliefs:

1.) “We need a much bigger spike in inflation data in order to get another rate hike in 2023.”

2.) “Another rate hike isn’t that big of a deal as long as we get the “soft landing” we were promised.”

Whatever the case may be, one thing’s for certain…

The market is not worried about what’s going on!

That’s all for now.

Until Next Time,

-Damian