The Federal Reserve has gone from an inflation-dependent policy, now that Core PCE, their preferred inflation indicator, has been below 3% for eight straight months, to a labor-dependent policy.
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E-mini S&P (September) / E-mini NQ (September)
S&P, yesterday’s close: Settled 5479.50, up 60.00
NQ, yesterday’s close: Settled at 18,692.25, up 234.00
The wind sure has shifted. Is anyone talking about tomorrow’s CPI report? Yes, the Federal Reserve has gone from an inflation-dependent policy, now that Core PCE, their preferred inflation indicator, has been below 3% for eight straight months, to a labor-dependent policy. This means labor is the committee’s focus, and in Fed Chair Powell’s words, “further deterioration of the labor market is unwelcomed.” The trajectory of the labor market is clear after August’s job growth was released last Friday, and there have been continuous negative revisions. However, markets like to fool the greatest number of participants, and although we are not sitting here expecting a hot read on tomorrow’s CPI, we must ask ourselves what would fool the greatest number of market participants.
Yesterday’s snap back in E-mini S&P and E-mini NQ futures was just that until the indices can start clearing the high volume ranges from last week. After last Tuesday’s close, the most volume traded in the E-mini S&P at 5522-5525, and this leads into major three-star resistance at 5528.25-5532.50. This tells us that a close above here is needed to begin repairing the damage from last week. Similarly, the most volume in the E-mini NQ traded at 18,945 and major three-star resistance comes in at…
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