Two Events Are Coming Up That Could Could Threaten This Market, And This First One Is Happening Tomorrow

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Citigroup currency strategist Steven Englander notes that the market is in a fragile position, and that there are two events coming up that could derail things:

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The two big risk events are the US CPI and next week's FOMC. We already saw equities come off a little today, short and medium term note yields move up, and 10yr Treasury yields fall in line with equities. We suspect that investors will hedge a small part of long risk positions in coming days, but only languidly. They have begun to discount non-press conference meetings as being like the ECB's non-forecast meetings, unlikely to generate much waves.

The first one of the two risk events is Tuesday at 8:30 a.m., when we get CPI.

One of the big questions in the economy right now is whether inflation is picking up, because if it is, then that might push the Fed to tighten rates sooner than is currently expected.

Generally, inflation hasn't been a thing in several years, but in recent months, core CPI has picked up notably. If that continues, then pressure on the Fed to hike rates will rise significantly.

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