Lower CPI Data – But Don’t Be Fooled by “Good” Inflation Numbers

Summary:
Markets cheered on lower CPI data, but the optimism might be misplaced. A softer inflation print gives the FED more flexibility, yet it also reduces the urgency for two rate cuts this year — something traders had already priced in.

Logic:

CPI came in weaker → short-term bullish sentiment.

But the real driver of rates is not CPI alone — it’s the balance between inflation and growth.

With inflation easing and economic activity still stable, the FED doesn’t need to cut twice in 2025.

Futures market (CME FedWatch) was pricing two cuts, which means that optimism is already priced into NASDAQ valuations.

Scenario Outlook:

If CPI remains stable and growth holds → only one cut or delay, not two.

That means tech valuations might need to reprice lower, especially high beta names.

NASDAQ could revisit support around 17,000–17,200 before finding balance again.

Trading View:

Watch for rejection near 18,000–18,200 (overextension after CPI rally).

Short-term bias: bearish / correction mode.

Long-term bias: still bullish, but needs valuation reset.