CPI Data Leak? Traders Cry Foul Over Suspicious Market Action

The SPDR S&P 500 ETF Trust SPY initially jumped more than 2.5% on Tuesday morning after the consumer price index inflation reading for November came in lower than expected. Yet the timing of the initial spike in the stock market has raised some eyebrows among seasoned traders.

What Happened? About 60 seconds before the CPI report was posted on the Labor Department's website Tuesday morning, stock futures jumped 1% and Treasury volumes surged, sending yields down by about 0.04%.

Over 13,000 March 10-year futures were traded in the final minute before the CPI report was released at 8:30 a.m. on Tuesday morning, an extremely high volume for that time of the day.

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Why It's Important: The CPI was up 7.1% in November, down from 7.7% in October and below the 7.3% growth economists were expecting. Stocks rallied on the news on Tuesday in the hopes that lower inflation will allow the Federal Reserve to pause interest rate hikes sooner than expected.

White House Press Secretary Karine Jean-Pierre denied a leak from the Biden administration on Tuesday and downplayed the market action.

"I can tell you definitively, or at least I am not aware of any leaks,” Jean-Pierre said.

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The U.S. Bureau of Labor Statistics also said it is unaware of any premature leaks of the CPI report. Yet a spokesperson for the BLS told Bloomberg that some government officials do routinely receive the CPI data prior to its public release, a practice that is allowed under federal guidelines.

Benzinga's Take: Unfortunately, without any definitive evidence of a leak, the market trading action is merely circumstantial proof that news got out before it was supposed to.

Unless investors get an update that the U.S. Securities and Exchange Commission or other regulators are investigating the potential leak further in coming days, investors will likely never know who or what was actually responsible for the suspicious market activity.

Photo via Shutterstock.