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Good morning market watchers!

The March CPI report is due at 8:30 a.m. ET today — and with it come implications for Fed policy and market volatility.

I caught up with a JPMorgan economist to make sure we (myself included) are briefed on today’s critical inflation report.

After, we’re diving into Boeing’s latest snafu, the Treasury Department’s request on crypto, and earnings.

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*At a glance:

• DJIA: 39,225.00, up 0.07%

• S&P 500: 5,265.50, up 0.10%

• Nasdaq Composite: 18,381.75, up 0.12%

• 10-year Treasury yield: 4.356%, down 1 basis point

• Gold: $2,372.20 per ounce, up 0.41%

• Bitcoin: $69,087.00, up 0.24%

• Brent crude: $89.43 a barrel, up 0.02%

*Pre-market data and moves as of 1:00 a.m. EST

A top JPMorgan economist shares his CPI preview

Joe Seydl is a senior markets economist at JPMorgan Private Bank.

He’s the guy you want on the phone when critical data is about to come out.

Don’t believe me? Seydl just took a vacation to Japan because of — get this — how much the yen has fallen against the dollar.

For the March inflation report, he shares the consensus view for a headline CPI of 0.3%, month-over-month.

That would be less than the 0.4% rise seen the prior two months.

“12 months ago inflation was very broad, and we feel confident today that inflation has improved, as it’s not as broad as it was,” Seydl said.

For context: The Cleveland Fed’s inflation model currently predicts 0.31% for March as well as April.

“Today, inflation is being driven by two components: shelter inflation and insurance,” Seydl said. “Both of those aren’t that sensitive to monetary policy. The shelter component is lagged, and we have confidence that will improve.”

The economist added he’ll be looking for changes in seasonality trends.

“At the beginning of the year, a lot of companies reset both wages and prices, so there tends to be seasonal variation,” he said.

“If you look at a chart how months change through the year, January and February are typically hotter months for CPI, then you see some relief in March.”

While Seydl doesn’t anticipate a too-hot reading, if CPI surprises higher then stocks could see increased volatility.

On the other hand, he said markets likely won’t rally even if the print comes in cooler than expected.

These are the risks he sees to markets right now:

• Rebound in inflation

• Geopolitical tensions in Middle East

• US presidential election

JPMorgan Private Bank’s base case remains three interest rate cuts in 2024.

But Seydl noted the odds of that falling to two are increasing.

“Our outlook is still constructive because we think the broader trend still looks disinflationary, and we think the geopolitical backdrop won’t get worse,” Seydl said.

Meanwhile, here’s what he said when I asked him what he’s telling clients and investors right now:

“The rally over the last few years has been US-driven. International assets have been something we’re more open to talking about with clients. We like opportunities in Europe, India, Japan and Mexico, in terms of international equities. The opportunity for better returns outside the US is looking a little bit better.”

Elsewhere:

• Boeing stock dropped after The New York Times reported on new whistleblower claims. The Federal Aviation Administration is investigating an airline engineer’s allegations. (NYT)

• The Baltimore Bridge collapse and Taiwan earthquake threaten global trade. New supply chain pain points have emerged, commodity exports are in flux, and corporations are scrambling. (Bloomberg)

• The Treasury Department asked the Senate for new laws allowing it to intervene in terrorist financing or sanctions evasion that use cryptocurrency. (WSJ)

Rapid-fire headlines:

• Delta Air Lines reports earnings Wednesday

• State Street says the Fed will cut rates 50 basis points by June (Bloomberg)

• Google Cloud and Nvidia announced a new AI partnership (Investopedia)

• OpenAI and Meta are about to release AI models capable of “reasoning” (FT)

• Oil traders don’t expect the energy market to loosen soon (Bloomberg)

• More Americans are living paycheck-to-paycheck compared to 2023 (CNBC)

Last thing:

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