Inside Markets

A flash manufacturing PMI number of 51 seems more likely than 48, and anything north of 50 will take the SPX higher by validating the recent move in homebuilders, semis and transports.

Markets are waiting for a traditional recession or soft landing to follow the Fed’s tightening cycle, but there may be a third template that fits better.

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The SPX needs cyclical sector leadership to sustain higher levels from here.

The S&P 500 has gained +5.7% since the index broke technical resistance at ~4200. Thin leadership and narrow breadth on the approach to 4200 were reasons to remain tactically bearish.

Yesterday’s Fed meeting is being characterized as a ‘hawkish skip’ after the revised dot plot implied two more rate hikes rather than one.  

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Yesterday's CPI print delivered a favorable outcome for risk assets.

Widening market breadth beginning in late May removes a key technical concern for the sustainability for the rally.

Consensus is looking for YoY headline CPI to drop to +4.1% from 4.9% last month and the core rate falling to +5.3% from 5.5%.

Yesterday’s higher-than-expected jobless claims pushed bond yields lower, which led to some reversion in recent cyclical and small cap outperformance

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The likelihood of a US recession took a step forward after today’s jobless claims number rose above +260,000.