JPMorgan Sees Stocks Exploding More Than 10% On Big CPI Miss: Here Is The Full CPI Matrix And How To Trade It
With stocks collapsing to start the month of December (after a remarkable, "pre-pivot" meltup in October and November), the stakes ahead of Tuesday's CPI print (as well as the Wednesday FOMC but we'll cross that bridge when we get there), the year's final and most important economic data point, are higher than ever according to the trading desk of the largest US bank, JPMorgan.
Some background: the November CPI print was +7.7% Headline YoY vs +7.9% exp; and down from +8.2% prior. This 50bps decline in the YoY reading was the second largest of this cycle. The SPX exploded 5.5% higher that day while the nasdaq added 7.5% and RTY 6.1%. The JPM Cyclicals Index, Momentum Short, and Expensive Software indices all had double-digit gains. The 10Y yield fell 28bps and the DXY plunged -2.15%, the dollar's largest one-day decline since 2015.