To The Moon

Wednesday's CPI data for December have investors exposed to surprises in either direction. The stakes are high because investors are exposed to surprises in either direction from the CPI report. The annual headline CPI inflation rate - which fell for six straight months from April to September 2024 - is now anticipated to edge back up for a third straight month, to 2.9% from 2.7% in November, based on the median estimate of economists polled by the Wall Street Journal. Expectations are for this annual headline rate to approach 3% for the first time since July, a few months before the Federal Reserve delivered the first of its three 2024 rate cuts.Reynolds said the process of re-evaluation could last "until confidence is reanchored at a reasonable range around 2%." He added that a 10-year yield of 5% is possible, depending on how meaningful any acceleration in CPI inflation turns out to be. In addition, traders would continue to pull back on their expectations for further easing by the