What Happened

  • CPI came in softer than expected, led by cooling core services.
  • Treasury yields dropped and the curve steepened on lower rate expectations.
  • The dollar weakened while equities rallied across growth and cyclicals.
  • Gold and industrial metals caught a bid.

What It Means

  • Inflation relief reopens the path for mid-year rate cuts.
  • Lower yields ease pressure on high-duration equities.
  • A softer dollar supports commodities and EM assets.

What I Think

  • This print resets the tone, but follow-through depends on earnings.
  • I expect growth to bounce, but I am watching breadth closely.
  • If yields stabilize lower, the rotation may broaden rather than reverse.

Market Terms

  • Core services - Inflation in services excluding housing, a Fed focus.
  • Curve steepening - Short yields fall faster than long yields, widening the spread.
  • Breadth - The number of stocks participating in a move.