Great CPI Reaction, But So What? Wed, July 12, 2023, 3:40 PM Great CPI Reaction, But What’s Next? Today’s CPI data serves an important role in fending off the worrisome persistent inflation narrative. The 0.2% level on a monthly basis is, after all, annualized to 2.4%. If this level is maintained, the Fed will be in a position to declare victory over inflation and rule out any further interest rate increases. The market takeaway seems to be that the CPI takes one of the two additional rate hikes off the table, but that wasn’t enough to change the course of the upcoming meeting. From a technical point of view, bonds are up enough to offset the damage from last week. M/M Core CPI 0.2 vs. 0.3 f’cast, 0.1 ex Y/Y Core CPI 4.8 vs. 5.0 f’cast, 5.3 prev 09:03 a.m. Slightly stronger overnight with additional gains after CPI. Mohammed bin Salman by almost half a point. 10 years, 6 bits per second at 3.915. 01:26 PM The climb continues…Mohammed bin Salman leads by 3/4 of a point. 10 years, down 11.7 points per second at 3.859. 02:52 PM Istiwa now and back hair only. Mohammed bin Salman is just above 3/4. 10 years, 10.7 bps at 3.869. Download our mobile app to get alerts on MBS Suspension, MBS Stream and Treasury Rates.