Inflation risks for traders to be revealed by US CPI on Wednesday
By Joseph Toppe
20:04, 10 May 2022
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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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%.
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. “
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