The market is showing high sensitivity to anything touching inflation at the moment. The University of Michigan’s consumer sentiment survey was slightly stronger at 71.2 compared to 71.0 expected but the market may be cheering the improvement in inflation expectations, as the one-year metric fell to 3.3% from 3.4% and the 5-year metric to 2.9% from 3.0%.
In any case, risk trades have rebounded since and the S&P 500 is now in positive territory, up 2 points to 4472.
SPX 5 min chart
In FX, the Canadian dollar is running in the latest leg as oil also rises on the better risk trade.