(Bloomberg) — Karine Jean-Pierre, President Joe Biden’s press secretary, was quick to dismiss the question as it came up at the end of her daily news conference on Tuesday. No, she said, it’s unlikely anyone in the White House leaked the November inflation report before the 8:30 a.m. release. As far as she sees it, too much noise has been created over what are just “small market movements”.
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But nothing petty about the rally took place in the seconds before better-than-expected inflation numbers appeared on the Labor Department’s website.
Stock futures unexpectedly jumped more than 1%. Treasuries futures trading surged, pushing benchmark yields down about 4 basis points. Those are big swings in such a short period of time — bigger than full session swings on some days. And they should be scrutinized by regulators, longtime market watchers say, even if leaks are just one of several possible explanations for why sudden traders However, the purchase started right before the report was published.
Jerome Selvers, president of securities law enforcement and litigation at Pashman Stein Walder Hayden, said: “Significant trading activity in the wake of market-changing news is suspicious and often worthy of authorities’ attention. management makes the appropriate requirements. “This is unusual, especially given the reduction in inflation that has been reported, far beyond what the market expected,” he said. “Someone will probably look at it, whether it’s innocent or not.”
Of course, if and when such an investigation occurs remains to be seen. For its part, the US Bureau of Labor Statistics said it was not aware of any early release of the data.
However, in the 60-second period before the data was released, more than 13,000 March 10-year futures contracts changed hands (during a period in which activity would normally be non-existent) when the contract was announced. bid. Stocks and bonds rallied shortly after the data was released, as investors speculated that cooling inflation means the Federal Reserve will pause its tightening cycle early next year.
CME data released Wednesday, showing open interest – or the new level of risk that traders hold – has increased across all Treasury futures, implying that activity buying in and around Tuesday’s inflation data was driven by new long positions rather than including existing long positions. short.
BLS spokesman Cody Parkinson said via email that while the agency is not aware of any early releases, some government officials often receive data prior to release in accordance with federal guidelines. state.
Read more: Time to buy big Treasuries before CPI announcement
Excluding food and energy, CPI rose 0.2 percent in November and 6% from a year earlier. The median estimate in a Bloomberg survey of economists was a 0.3% monthly gain.
–With support from Reade Pickert.
(More details on open interest showing a jump in long Treasuries in the seventh paragraph)
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