On Tuesday, markets rose for the second day in a row. The S&P 500 was up 1.3% and Toronto was up 0.7%.
There were some indications that the bank contagion may not get any worse.
Canadian inflation came out lower than expected at 5.2% year over year.
More importantly, this was the sixth month of quite tame inflation on a monthly over month basis. The total inflation in the past six months was apparently only 1.2% but the year-over-year numbers were high because of earlier inflation. This particular report is definitely one where people can cherry pick and conclude things are much better or are still terrible. Basically people believe what they want to believe, and see what they want to see, as always.
Obviously, even if we do get back to 2% year-over-year inflation, it will still be about 10% higher than two years ago if the first year was 8%. No one is expecting prices to return to the 2021 level. The 2% inflation target would be on a go forward basis and would not erase the high inflation that already occurred.