Payne's Perspective: December 12, 2022: All About CPI
It was a tough week that never got off the ground. When the dust settled on Friday, it was clear anxiety had shifted to the Consumer Price Index (CPI) report and the Fed’s guessing game, which has become a national pastime. Late Friday, something spooked the market. Bond yields soared, and equity indices plunged with one hour left in trading.
Even before then, it was difficult as most economic data releases came in hotter than expected, chipping away at the latest bear market rally. And it was casting a pall over the notion the Fed could put its policy on a path of lower hikes and then a pause over the next three Federal Open Market Committee (FOMC) gatherings. Interestingly, most gauges of the Fed policy from here still support a first-quarter 2023 pause.
As bad as it was for stocks, it was infinitely weaker for crude oil. Crude oil is a global commodity and influenced by things like China’s economy, which shutdowns have roiled. However, the decline of 10.6% for the week is shocking and may be more about the potential U.S. recession.
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