Yesterday’s US Consumer Price Index (CPI), showed numbers going in the wrong direction. The headline year-on-year CPI rose 3.2%. This was higher than expected, and above the +3.1% reading from January. Previously, January’s numbers had disappointed, coming in above expectations although still showing an overall decline. That had caused a serious market disruption and a sharp sell-off in risk assets. It’s worth noting that Headline CPI has shown no improvement since June last year when it dropped to +3.0% year-on-year. Yesterday we saw an initial knee-jerk sell-off before prices turned up with the S&P 500 going on to close at a record high. It does sometimes happen that the market rallies after the release of an important number, even if that number disappoints. It’s a sign of relief as much as anything. But it also indicates that path of least resistance is upwards for now, as investors are not yet ready to call a top. As far as forecasts for the path and timing of Federal Reserve rate cuts are concerned, nothing really changed. The probability of no change at next week’s meeting is now 99%, while there’s now a 58% likelihood of a 25 basis point cut at the June meeting. Once again, NVIDIA was a feature yesterday. The designer of chips used in generative AI rallied over 6%, and is back within spitting distance of its own record high from last week. This move helped to lift the NASDAQ 100 by 1.5% on the day. It’s been a relatively quiet session so far. But we are seeing a modest sell-off in tech. Today’s notable losers are NVIDIA and Tesla which are both down over 3%. The S&P 500 is trading above the top of its trading range (see chart) suggesting that we’re either experiencing, or about to experience, a bit of a blow-off top. There’s also continued negative divergence with the daily MACD (as there is also with the NASDAQ 100) suggesting that caution is warranted now more than at any time during this rally.