1. Which US sector rallies most on a benign CPI print?

Thus far, equities are viewing weaker economic data as positive (Fed rate cuts) rather than negative (recessionary).

For believers in that, the implication is a benign CPIr eport next week could be the catalyst for further upside in the interest rate sensitive sectors.

The Watchlist below (available on request) looks at Qi's models across several RV pairs - all rate sensitive sectors relative to the broader market.

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The standout is various financial ETFs have lagged and sit cheap versus the S&P500 relative to prevailing macro conditions.

XLF has the biggest FVG & also would have the best back-test stats (73% hit rate; +0.95%average return) if it was in a regime. Model confidence is rising but, at 51%, it sits below our threshold for a macro regime.

From a spot price versus Qi FVG perspective, KBE vs. SPY looks the most interesting. 59% correlationover the last 1y suggests the Valuation Gap has tended to close via the marketcatching up/down to macro fundamentals.

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