Market Eyes CPI Report, but Tomorrow’s Jobless Claims May Hold the Real Surprise

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Market Overview Analysis by Michael Kramer covering: USD/JPY, 10-2 Year Treasury Yield Spread. Read Michael Kramer's latest article on Investing.com

was only slightly weaker. Overall, the day was relatively quiet, serving as a reminder of the market divergence that occurred on July 31.The yield curve also steepened today, but it is trending upward slowly at this point. It cleared resistance after the, but it has stalled since. I think we need more data to get a clearer picture, whether it’s a weak CPI report today or an increase in. It’s possible that the most important data this week isn’t even the CPI but the claims data on Thursday.

If the yield curve is steepening and the yen carry trade is still unwinding due to a narrowing rate differential, then a brief rally in the stock market over a few days won’t make much difference in the long run.However, if the USD/JPY starts trending lower again, it could become a bigger problem. This is because the USD/JPY tends to move in line with interest rate differentials, and as long as rates in the US are falling, it will likely cause the USD/JPY to decline as well.

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