CPI numbers released market tension
(These are the market notes on today’s action by Mike Santoli, CNBC’s Senior Markets Commentator. See today’s video update from Mike above.) What little tension the markets were holding heading into CPI report was released when the numbers didn’t materially differ from forecasts and were paired with what appeared to be another sign of labor-market softening. Stock indexes released to new highs and Treasury yields compressed toward five-month lows as investors took the uptick in weekly jobless claims as permission to look through 3%-ish inflation and price in multiple Fed rate hikes. All the better that the weaker jobs data of the past two weeks can plausibly be seen as a head fake, or not fully representative of the underlying economic trajectory: If the Fed is mostly responding to iffy jobs trends and broad consumption, credit, capex and GDP-tracking activity is firm, the market gets the “Easier Fed without needing it” that the bulls have been positioned for since mid-summer. Whatever the macro rationale, the character of the market response is pretty emphatic, striking all the key chords of a bull-market symphony: Market breadth 80% to the upside, consumer-cyclical, industrial, small-cap and financial sectors handily outperforming, semiconductors at a new high , new IPOs eagerly received , the VIX back below 15 . Because the S & P 500 has spent nearly the past six weeks rotating, slowing down, digesting, churning below the surface, the index itself is not yet reading as extremely overstretched to the upside, but Thursday’s pop is starting to look a little grabby. Meme stocks ramping, for one thing. As a reminder that today’s move is more a modest acceleration of an ongoing trend than a brand-new one, the index popped above the trend channel defined by a standard Bollinger Band path, as seen here. Not too dissimilar from early July and mid-August. The drop in bond yields is notable though the magnitude of the decline to 4% on the 10-year in recent days is not dramatic. The bond market got to this mode of downplaying inflation and embracing a dovish Fed phase before the CPI hit. The rates futures market is fully priced for three quarter-point cuts by year’s end. Given the slight shift toward caution that took hold among investors during its benign August-September consolidation, broad positioning seems well short of aggressive extremes. The weekly NAAIM Equity Exposure Index, a gauge of active tactical market timers’ posture, is off recent highs with room to re-expand before it becomes a concern. Stocks, of course, can be fine with allowing inflation to hang near 3% with the Fed biased to ease for a while. With global fiscal spending unrestrained, a cash-and-credit fueled data-center capex frenzy raging, corporate balance sheets solid, M & A picking up and regulators encouraging a regime of “beg for forgiveness rather than ask for permission,” no one should bet against a further upwelling of animal spirits. But stay mindful of the market’s intermittent tendency to have rallies culminate on friendly-data-release days when most macro obstacles seem to have been cleared. This one: with stocks back to their bull-market highs in valuation and plenty of room for disappointment created by the rallies across asset classes, and the relief and sense of certainty they have ushered in. ( Learn the best 2026 strategies from inside the NYSE with Josh Brown and others at CNBC PRO Live. Tickets and info here . )
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