JPMorgan's View on US Data - FJElite

With the market viewing the US / Iran Conflict as over, or at least no longer a material restriction on energy supply, inflation expectations have declined. That is reflected in options breakevens for the print, pricing about 70bps of moves versus 1% -1.1% is more common. Breakevens for Wednesday are pricing ~80bp (PPI) and Thursday ~90bp (Retail Sales). This may be the market expressing the view that micro is now the primary driver of the index rather than macro, given earnings kick off on Tuesday. Feroli sees a dovish outcome with Headline falling and Core increasing at a decreasing rate.

Given the volume of banks’ earnings coming on Tuesday, that is more important for Equity risk sentiment than the CPI print, though the inflation print remains important for the shape of the yield curve and thus factor / sector moves. An inline or dovish print may steepen the yield curve, supporting the Cyclicals / Global Reboot theme. Long bond yields is a tailwind for Tech. Though the AI theme has proven to be resistant to changes in inflation expectations as well as bond yields. For US Mkt Intel, it would take a significantly hawkish print to adjust our tactically bullish view, e.g. Core MoM printing -0.4% or higher. With positioning still low, earnings expectations positive, and the macro picture good (and improving) this is why our scenarios are tilted bullishly.