When looking at the latest Positioning Intelligence report from JPM's Prime Brokerage (available to pro subs), JPMorgan trader and Market Intel strategist Andrew Tyler asks "are we setting up for a Tech-led squeeze higher?" The reason for question, Tyler explains, is that "given the consensus bearish view of Equity markets, driven by expectations for the Fed to hike us into a recession, a sharp squeeze would catch a number of investors offsides. A cooler CPI print likely creates that squeeze but that may not be enough to change the prevailing narrative."
That said, JPM's co-head of FX strategy Meera Chandan writes, “USD is undershooting modestly and prices in 0.5-1%pt improvement in global growth" and adds that "the current regime is starting to look like Goldilocks: growth outlooks in Europe and China revised up, US resilient and inflation softening.”
According to Tyler, "this means that If yields and the dollar remain stable around current levels, then we could see an Equity market that behaves accordingly. Should that scenario come to fruition, you could see the US reduce its underperformance to other regions, especially if we see Retail investors return as buyers."