Analysts at BTIG noted in a client memo on Wednesday that the hotter-than-expected CPI print slashes June rate cut odds and brings S&P e-mini futures (ESM4) near 50 DMA (5167).
The inflation report revealed that headline and core prices rose 0.4% month-on-month in March, adding doubts to the idea that the pickup in inflation in January and February was just a blip.
In addition, the data has resulted in the chances of a June rate cut being reduced.
"As we wrote in our weekly note, we expect SPX cash to get its first 50 DMA (5095 now) since Nov," wrote BTIG. "The reaction to that will set the tone. Losing ~5095 (SPX) would open the door to a gap fill from Feb. 21st at 4983."
Furthermore, the firm believes that with yields spiking and rate cut odds pushed out further, long-duration assets are likely to struggle. BTIG recently thought Biotech was a tactical opportunity but feels that will be put to the test today.
"We will be watching the momentum factors to see if this news causes flows back into high-momentum," added BTIG. "A failure to do so would be quite telling, but for now, would expect high-momentum to outperform low-mo."