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Inflation risks for traders to be revealed by US CPI on Wednesday

By Joseph Toppe

20:04, 10 May 2022

Inflation graphic
Dow, S&P, Nasdaq mixed on Tuesday after Monday’s bloodbath - Photo: Getty Images

Inflation risks ahead of Wednesday’s Consumer Price Index (CPI) report stirred the major benchmarks on Tuesday, while opening the door to new traders should the government data reveal a decrease in inflation.

In an interview with Capital.com, Edward Moya, Senior Market Analyst at OANDA in New York, said "Investor strategies have dramatically shifted the past few weeks due to market volatility."

“For the new investor, the market conditions are too chaotic, and the constant changing of correlations has forced some to the sidelines,” he continued. However, “if inflation decelerates sharply tomorrow, that could be the greenlight for some investors, but an all-clear signal won't happen until China's lockdown situation improves.”

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DOW USA 30 (US30)

US indexes: Dow falls before the bell

During the session, the Dow Jones Industrial Average (US30) shed 0.26%, the S&P 500 added 0.25%, while the Nasdaq Composite (US100) gained 0.98%.

On Monday, the Dow lost 1.99%, the S&P went 3.30% lower, and the Nasdaq shed 4.29%.

J225

40,214.00 Price
-0.710% 1D Chg, %
Long position overnight fee -0.0110%
Short position overnight fee -0.0112%
Overnight fee time 21:00 (UTC)
Spread 10.0

DE40

18,494.60 Price
-0.210% 1D Chg, %
Long position overnight fee -0.0221%
Short position overnight fee -0.0001%
Overnight fee time 21:00 (UTC)
Spread 1.5

US100

18,280.50 Price
0.000% 1D Chg, %
Long position overnight fee -0.0262%
Short position overnight fee 0.0040%
Overnight fee time 21:00 (UTC)
Spread 1.8

US30

39,783.20 Price
+0.060% 1D Chg, %
Long position overnight fee -0.0262%
Short position overnight fee 0.0040%
Overnight fee time 21:00 (UTC)
Spread 2.2

Over the last five days, the blue-chip index is off 2.92%, the Standards & Poor’s is off 4.18%, and the tech-heavy benchmark is 6.58% lower. Year-to-date, the big three are down 11.50%, 16.05%, and 24.97%, respectively.

Bond Market: Prepping for high inflation

Moya said, “the question remains how aggressive the Fed will be in fighting inflation, after locking themselves into a couple half-point rate increases before the Jackson Hole Symposium.”

“Should inflation not decelerate as many are expecting, more aggressive Fed tightening could be warranted,” he added. “The bond market is starting to price in softer inflation over the next year, but higher inflation over the long-term, which is not good news for the Fed. “

1-3 Year Treasury Bond ETF

 

Markets in this article

SHY
iShares 1-3 Year Treasury Bond ETF
81.89 USD
0.08 +0.100%
US500
US 500
5249.9 USD
0.3 +0.010%
US100
US Tech 100
18280.5 USD
-0.8 0.000%
US100
US Tech 100
18280.5 USD
-0.8 0.000%
US100
US Tech 100
18280.5 USD
-0.8 0.000%

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The difference between trading assets and CFDs
The main difference between CFD trading and trading assets, such as commodities and stocks, is that you don’t own the underlying asset when you trade on a CFD.
You can still benefit if the market moves in your favour, or make a loss if it moves against you. However, with traditional trading you enter a contract to exchange the legal ownership of the individual shares or the commodities for money, and you own this until you sell it again.
CFDs are leveraged products, which means that you only need to deposit a percentage of the full value of the CFD trade in order to open a position. But with traditional trading, you buy the assets for the full amount. In the UK, there is no stamp duty on CFD trading, but there is when you buy stocks, for example.
CFDs attract overnight costs to hold the trades (unless you use 1-1 leverage), which makes them more suited to short-term trading opportunities. Stocks and commodities are more normally bought and held for longer. You might also pay a broker commission or fees when buying and selling assets direct and you’d need somewhere to store them safely.
Capital Com is an execution-only service provider. The material provided in this article is for information purposes only and should not be understood as investment advice. Any opinion that may be provided on this page does not constitute a recommendation by Capital Com or its agents and has not been prepared in accordance with the legal requirements designed to promote investment research independence. While the information in this communication, or on which this communication is based, has been obtained from sources that Capital.com believes to be reliable and accurate, it has not undergone independent verification. No representation or warranty, whether expressed or implied, is made as to the accuracy or completeness of any information obtained from third parties. If you rely on the information on this page, then you do so entirely at your own risk.

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