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- CPI Day: A Moment For Investors To Look Inwards
CPI Day: A Moment For Investors To Look Inwards
Daily Update on SPY, QQQ, TLT, USO, BTC, COIN, Mag-7, Gold, PLTR
Yimin Xu
June 11, 2025
Hi YXI friends,
This CPI day has come rather quickly within the month. It is also a convenient timing for the market to assess whether their current macro outlook regarding “stagflation” and tariffs is still reasonable.
Moreover, as SPY and QQQ are 1% away from their all time highs, investors will wonder whether it’s wise to add fresh capital here, given where valuations and yields are.
Indeed, we will go through these considerations below today. My CPI expectation is an in-line or higher Headline CPI and a softer-than-expected Core CPI. I don’t think either outcomes will motivate the Fed do anything hastily. Therefore, the data release is more of an opportunity for investors to look inwards.
If you are looking for our Systematic Signals directly, you can find them in our dedicated morning note on SPY, QQQ, BTC, TLT, AAPL, AMZN, GOOGL, META, MSFT, NVDA, TSLA (free), PLTR (free).
Let’s dive in!
Table of Contents
DISCLAIMER: This newsletter is strictly educational. Any information or analysis in this note is not an offer to sell or the solicitation of an offer to buy any securities. Nothing in this note is intended to be investment advice and nor should it be relied upon to make investment decisions. Any opinions, analyses, or probabilities expressed in this note are those of the author as of the note's date of publication and are subject to change without notice.
0. YXI Daily Dashboard
The Three Daily Observations
Risk assets inched higher again on Tuesday.
Yields are 12bp higher than a week ago, which could begin to weigh on stocks as they approach the all time high.
Today’s CPI (8:30 ET) could tempt Wall Street to price in more cuts for the next 12 months.
Click here for the past YXI article explaining many of the components of the dashboard.
1. CPI Preview
Last month’s recap
Recall that Headline CPI dipped to 2.3% YoY in April, while Core CPI stayed flat at 2.8% YoY.
May CPI Estimates
For May, Wall Street expects a 0.2% MoM / 2.5% YoY rise in the Headline CPI and a 0.3% MoM / 2.9% YoY rise in the Core CPI.
A higher-than-previous-month Core CPI is likely driven by the hot hourly earnings (0.42% MoM) in May, that was released with Nonfarm Payrolls.
My proprietary machine learning model suggests the risk of Core CPI reading is in fact to the downside surprise. The Headline CPI is likely coming in line with the estimate or just above.
My prediction is that this particular set of CPI will again leave the Fed unmotivated to rush into new action soon.
2. SPY, QQQ, (SPDW)
SPDW is updated every Monday.
SPY is now just 1.3% away from its all time high. Getting to $607 would move it decisively into the 1.382 extension, which is the basic expectation of an impulsive wave (iii).
The impressive thing is that despite a a wave of selling at the 1.236 extension $595, SPY managed to shrug it off and press higher in the past week. If this is not a bull market, I don’t know what is.
As we inch towards the all time high, all the usual valuation concerns are coming back. This will start to weigh, especially as yields remain high.
SPY P/S and P/E (NTM)
Looking at SPY’s Price/ Sales and Price/ Earnings ratios (next-twelve-months), the market is close to the +2 standard deviation levels of the past 10 years. Note that the current valuation is lower than December due to earnings growth in Q1.
Short-term traders can still enjoy the near-term upside from momentum and price technicals. However, long-term investors need to have a honest conversation with themselves on the attractiveness of equities at these valuations, in a 10-year horizon versus an outright yield of 4.5% in Treasuries.
QQQ is now just 1% away from the all time high, already at the February 13 level. It is firmly hitting the resistance trend line from October.
I do expect investors to start asking: are the fundamentals better or worse than mid-February? We have a lot more uncertainties and some real negative impact of tariffs on the economy. The Fed signals they are not ready to restart cuts.
On the positive side, corporate earnings were robust in Q1, with many companies keeping or raising their guidance.
These questions are not designed to scare investors - far from it. If we get a modest wave (iv) pullback digesting the implications of these questions, it bodes well for the final wave (v) higher.
QQQ P/S and P/E (NTM)
QQQ is approaching the +2 standard deviation in its P/S ratio, but its P/E ratio is about +1 standard deviation above its mean, helped by unusually high P/E levels in the post-COVID period.
3. FOMC Projections & Rates Futures
FOMC Projections
We use the Fed Funds futures market to understand the market expectations of future FOMC interest rate decisions.
FOMC Date | Before Meeting | Post Meeting | Hike/ Cut in % |
|---|---|---|---|
06/11/25 | 4.33 | 4.33 | 0 |
07/30/25 | 4.33 | 4.23 | -0.1 |
09/17/25 | 4.23 | 4.13 | -0.1 |
11/05/25 | 4.13 | 4.03 | -0.1 |
12/17/25 | 4.03 | 3.93 | -0.1 |
01/28/26 | 3.93 | 3.83 | -0.1 |
03/18/26 | 3.83 | 3.73 | -0.1 |
05/06/26 | 3.73 | 3.63 | -0.1 |
06/17/26 | 3.63 | 3.53 | -0.1 |
The market continues to expect just 3 cuts before June 2026.
3-month SOFR Futures Yields
4. Summary Of Today’s YXI Signals
SPY, QQQ, BTC, TLT, AAPL, AMZN, GOOGL, META, MSFT, NVDA, TSLA, PLTR
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