March 2026 CPI cool: core 2.7% prints below expectations
Market Closes
| Asset | Close | Change |
|---|---|---|
| S&P 500 (SPY) | 603.45 | +1.15% |
| Nasdaq 100 (QQQ) | 534.90 | +1.35% |
| Russell 2000 (IWM) | 232.50 | +1.85% |
| 20Y+ Treasury (TLT) | 93.95 | +1.25% |
| DXY | 99.80 | -0.55% |
| Gold | 3318.00 | +0.48% |
| VIX | 15.90 | -5.20% |
Economic Prints
What Happened
March 2026 CPI released April 8 printed 2.9% headline (vs 3.0% expected) and 2.7% core (vs 2.8% expected). Core CPI MoM eased to 0.2%, the lowest monthly pace since October 2024. The composition was encouraging: goods inflation near zero, services ex-shelter moderating to 3.5% YoY, and shelter showing continued gradual deceleration. Tariff-driven price effects, which had elevated CPI through 2025, appeared largely absorbed.
The rally was broad-based. S&P 500 gained 1.15%, small caps outperformed (IWM +1.85%) on rate-sensitivity, and long Treasuries rallied (TLT +1.25%) as June FOMC cut odds increased from 35% to 62%. The dollar weakened on narrowing rate differentials. Gold continued its uptrend, closing near $3,320.
The print reinforced the disinflationary narrative that had been building through Q1 2026. Combined with softening labor market data (unemployment 4.8% for March) and below-trend GDP growth (Q4 2025 +0.8% QoQ annualized), the case for the Fed to resume cutting at the June 17 meeting strengthened meaningfully. The April 8 session marks the beginning of the Q2 2026 "disinflation relief" mini-cycle that would extend through the summer.
Lessons
- ·Tariff-driven inflation typically fades 12-18 months after shock as absorption completes
- ·Broad-based disinflation (goods and services) supports Fed cuts more than goods-only
- ·Small cap leadership on cool CPI reflects rate-cut positioning
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