SignalPlus Macro Analysis (20240410): Inflation will continue to develop steadily

Yesterday, the market was busy adjusting positions ahead of the CPI release. Bloomberg reported a record SOFR futures block trade at the New York open, followed by rising prices/falling yields, indicating buying activity. Meanwhile, the 2-year Treasury yield stabilized at the key 4.75-4.80% level without further breakout.

At the same time, White House economic advisor Brainard told CNBC that the government still "expects steady progress on inflation in the coming months." Some speculated she might have early access to the data, leading traders to interpret this as the upcoming inflation figures likely meeting or slightly exceeding market expectations.

Meanwhile, asset manager State Street predicted a 50bps rate cut as early as June—an aggressive stance contrasting sharply with Apollo's view that the Fed might not cut at all this year. Clearly, there's significant divergence in market expectations for Fed policy.

The SPX plunged over 1% intraday, sparking chatter about possible CPI leaks, before slowly recovering to close above its 200-day moving average—with traders now positioned for the data release.

Multiple assets hover near critical technical levels: SPX at its 200-DMA, 2-year yields around yearly highs (4.80%), and USD/JPY near two-year peaks at 152 after BOJ's hawkish comments (UEDA: aiming to reduce JGB holdings). While we're neutral on CPI, synchronized technical breakouts are rare—we lean toward data aligning enough with expectations to sustain current trends. Good luck in 12 hours!