Monday's Market Minute: Inflation Data Takes Center Stage

Before we get into the data due out this week, U.S. indices and bitcoin futures at all-time highs are a pretty good example of how the risk-on environment we’ve seen this fall remains alive and well. This morning, we saw the Russell 2000 reach a new all-time high of 2450.90. The move up is a vote of confidence in the Fed’s ability to establish a fine line between the plan to taper asset purchases and conditions necessary to begin to raise interest rates.

This week, keep an eye on the inflation data due out Tuesday and Wednesday. First, on the producer side of things, we’ll be looking to see if the supply chain constraints have added to existing inflationary pressures. On the consumer side, investors will be looking to see if the pressures the producers have been forced to contend with are getting passed down. A spike in inflation data could slow the recent move lower we’ve seen in rates – the TNX fell back to 1.45% last week. We’ll also be keeping an eye on the NFIB Small Business data, Consumer Sentiment, and JOLTS numbers due out Friday.

Keep an eye on the U.S. Dollar; it’s been strong recently with the Fed announcing plans to begin to pull back stimulus and a better-than-expected jobs report to close the week out Friday. The U.S. Dollar hit new yearly highs of 94.645, just shy of the September 2020 highs. While at this point the strength in the greenback has yet to interfere with the move up mentioned earlier in the indices, interestingly enough it really hasn’t slowed the bid in crude or gold much either.

Lastly, oil dipped briefly below 80 last week, but the move lower was short lived and characteristic of the trend up we’ve seen where pullbacks have been – well, just that – short-lived.