Markets Digest Mixed Signals: Soft CPI, Tariff Jitters, and Geopolitical Flare-ups

E-mini S&P (June) / E-mini NQ (June)

S&P, yesterday’s close: Settled at 6029.00, down 16.00

NQ, yesterday’s close: Settled at 21,887.50, down 75.00

E-mini S&P and E-mini NQ futures continue a terrific consolidation. At this moment, the indices are trading a touch off their swing highs and have held up considerably well, given the revolving door of news.

Yesterday, moments ahead of the CPI release, President Trump wrote on Truth Social that a U.S.-China trade deal is done, “subject to final approval with President Xi and me.” Although light on details, such as semiconductors, the U.S. will impose 55% tariffs on Chinese imports, and China will impose 10% tariffs on U.S. imports. Notably, China will ease rare earth exports for six months, which may be an underwhelming timeline.

CPI then came in softer than expected, which is thematically what we have been calling for. Both Core and headline increased by 0.1%, below the +0.3% and +0.2% expected. Also, by +2.8% and 2.4%, respectively, each one-tenth less than expected.

Although E-mini S&P and E-mini NQ futures held near swing highs, there was a sense of exhaustion within the post-news spikes that were not able to hold fully. This falls in line with our narrative I have written about here over the last two days; the indices could be due for a healthy pullback, something just enough to get the bears excited (please read the previous two notes for details).

U.S. Treasury Secretary Bessent testified before Congress, and it wasn’t his comments that swung markets, ranging from President Trump will likely postpone the July tariff deadline, to the bill needs to be passed to avoid a financial crisis. Indices slipped on news that the U.S. was evacuating embassies in Iraq and other Middle East nations. With only a few details, it was known that geopolitical tensions were escalating with Iran.

This is where we find things this morning ahead of PPI and Initial Jobless Claims, both due at 7:30 am CT. Remember, producer prices are a leading indicator of consumer prices. Also, there is a 30-year Bond auction at noon CT.

E-mini S&P and E-mini NQ futures are testing an area of key support at 6000-6006 and 21,713-21,742. We will be watching for continued price action in the E-mini S&P below the breakout pocket, aligning with the February closing level at 6015.25-6019.50. Below this level, traders and investors have some reason to de-risk ahead of next week’s Fed meeting. In the case of such, major three-star support in the E-mini S&P will help define whether this is simply a pullback and check, or a bit more selling is called for, with that level coming in at…