🔥CPI & PPI Coming In Hot: “January Consumer Price Index (CPI) and Producer Price Index (PPI) readings both came in hotter-than-expected, throwing off many on Wall Street. The data has put more focus on the question as to when the Federal Reserve will cut interest rates.” (Yahoo! Finance)

👊Consumer Spending Takes A Hit: “Advance retail sales declined 0.8% for the month following a downwardly revised 0.4% gain in December, according to the Census Bureau. A decrease had been expected: Economists surveyed by Dow Jones were looking for a drop of 0.3%, in part to make up for seasonal distortions that probably boosted December’s number.” (CNBC)

🌽Grain Prices Hit Fresh Lows: “Grain futures dropped Thursday after the US Department of Agriculture forecast larger crop inventories for the 2024-25 marketing year amid waning global demand for US supplies. Both corn and soybean futures touched fresh three-year lows." (Food Business News)

📅Holiday Trading Hours: In observance of the President’s Day Holiday in the U.S., CME Group products will close at 12:00p CT on Monday, February 19th. Please refer to the CME Group website for more information about holiday trading hours. (CME Group)

📣FOMC Minutes Release: "The Wednesday release of January’s Federal Open Market Committee (FOMC) meeting minutes could provide more details about how members are viewing current economic conditions and when interest rate cuts could come. Comments from Philadelphia Fed President Patrick Harker and Minneapolis Fed President Neel Kashkari on Thursday could provide additional assessments of inflationary trends. (Investopedia)

💾More Big Earnings Reports: "Earnings reports delivered so far have been encouraging. So far, of the roughly of 80% of S&P 500 companies have provided their results, three-quarters have topped analysts estimates. Will the trend continue this week? Here are the stocks to watch in this holiday-shortened week…” (Nasdaq)

STOCK INDEX FUTURES

The S&P 500 futures finished the week lower -0.34%, after two hotter-than-expected inflation readings. The Nasdaq-100 futures closed the week down -1.48%.

The higher inflation data prints have investors rethinking the timing and extent of the interest rate cuts that the central bank has penciled in for this year.

Higher interest rates hit small-cap stocks the most. Despite that, the Russell 2000 traded +1.16% higher last week.

75% of S&P 500 companies have beaten EPS estimates for Q4, below the 5-year average of 77%, but above the 10-year average of 74%.

INTEREST RATE FUTURES

The recent January CPI report is a stark reminder that the United States' inflationary challenges may persist despite previous resolution expectations.

U.S. CPI came in higher than expected. The January Year-Over-Year Consumer Price Index reading printed at 3.1% vs an estimated 2.9%.

The market now sees no chance for a rate hike in March, with Fed swaps shifting the highest probability of a rate cut to June. See probabilities below.

Leading up to the December 2023 meeting, the prevailing sentiment among most Federal Open Market Committee (FOMC) members was a steadfast commitment to prolonged high interest rates to drive inflation back to its 2% target rate, even if it meant risking economic recession. The prioritization of taming inflation outweighed concerns about short-term growth setbacks.

Federal Reserve Chairman Jerome Powell expressed confidence that reducing inflation from its current level of 4% to the target rate of 2% would not pose a significantly greater challenge than the preceding drop from 6% to 4%.

Every Friday afternoon, Topstep Performance Coach John Hoagland fires up his charts and identifies the trends and “areas of importance” futures traders should look out for in the coming week. Read on to see what John’s keeping his eye on this week!

Coach Vince~

Remember these trading metrics: a 40% win rate with a 2:1 Reward-over-Risk equals a profitable trader. Trade well!

Coach Paul~

Predefine your risk.

Coach Jack~

“Instruction does much, but encouragement everything.” -Goethe

Coach Ray~

Stay true to your process, it will lead the way.