CPI’s higher than expected. A ‘janky’ data point?

Too hot for markets’ comfort
Major U.S. indexes fell on the hot CPI report. The S&P 500 slipped 0.21%, the Dow Jones Industrial Average declined 0.14% and the Nasdaq Composite ticked down 0.05%. The pan-European Stoxx 600 index dropped 0.18%. Germany’s GDP is expected to shrink 0.2% this year for its second year-on-year contraction, according to the country’s government.

Banks aren’t in the clear yet
Lower interest rates tend to benefit banks. As yields from money market funds and other assets drop, it slows the flight of cash from bank accounts. This lowers funding costs for banks, while yields on banks’ income-generating assets don’t fall as quickly. But that expectation may not be met so perfectly this time.

AMD announces new AI chip
AMD on Thursday announced a new artificial intelligence chip, the Instinct MI325X, that is pitched as a competitor to Nvidia’s Blackwell chips. Both are graphics processing units essential to large language models that power gen AI systems. If AMD’s chip is seen as a viable alternative to Nvidia’s, that could put pricing pressure on the latter.

[PRO] Silver lining to CPI report
Yesterday’s CPI report may have disappointed markets with its hotter-than-expected numbers. But not only does the report have encouraging signs if you read between the lines, it also contains a silver lining, writes CNBC Pro’s Fred Imbert.

If inflation is hot, interest rates need to be high to pour cold water on the economy and slow it down.

Atlanta Federal Reserve President Raphael Bostic agrees. “I am totally comfortable with skipping [rate cuts for] a meeting if the data suggests that’s appropriate,” Bostic told The Wall Street Journal in an interview Thursday.

But Bostic acknowledged it’s important to see whether individual data points cohere into a larger pattern, or if they’re just “janky,” as Bostic put it.