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US Stocks Rebound Following PPI Data

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  • March’s CPI rise undermines the Fed’s hopes for a soft landing by reducing rate hikes.
  • Latest softer-than-expected PPI, boosted markets

Inflation continues to surprise, with the consumer-price index rising significantly for the third consecutive month in March and exceeding forecasts for the fourth successive month.

This trend significantly undermines the Federal Reserve’s hopes of orchestrating a soft economic landing as rate cut expectation got pushed back for later this year.

Source: Fred

The CPI increased by 0.4% in March, repeating February’s rise after January’s 0.3% increase. This consistent three-month trend indicates more than a temporary fluctuation, with the annual price index reaching 3.5%. Significant contributions to the March increase came from shelter and gasoline, with rent and energy costs notably impacting consumers.

The core CPI, excluding food and energy, continued its upward trend with a 0.4% rise in March, marking the third month in a row at this rate.

Over the past year, core inflation has reached 3.8%, persistently above the Federal Reserve’s 2% target.

At the start of 2024, there were expectations of 7 rate cuts; now, they are down to 2.

Investors now foresee the Federal Reserve beginning these rate reductions at its September meeting, with one more cut expected by year’s end.

Despite high inflation, the job market and consumer spending continue to be robust.

Oil prices have surged past $85 a barrel. Meanwhile, producer prices have cooled off, providing some relief to markets concerned about persistent inflation.

The latest wholesale price data, out Thursday, came in slightly lower than economists’ expectations. The 10-year Treasury yield remained above 4.5%[1], but the S&P 500 and Nasdaq retraced all of their losses from the hotter-than-expected CPI data the day prior.

 

Investors can long the S&P 500 using our 3x US 500, 5x US 500.

Alternatively, traders can short the S&P 500 using our -3x US 500.

 


Footnotes:
  1. Tradingview
Your capital is at risk if you invest. You could lose all your investment. Please see the full risk warning here.

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Research

Sandeep joined Leverage Shares in September 2020. He leads research on existing and new product lines, asset classes, and strategies, with special emphasis on analysis of recent events and developments.

Sandeep has longstanding experience with financial markets. Starting with a Chicago-based hedge fund as a financial engineer, his career has spanned a variety of domains and organizations over a course of 8 years – from Barclays Capital’s Prime Services Division to (most recently) Nasdaq’s Index Research Team.

Sandeep holds an M.S. in Finance as well as an MBA from Illinois Institute of Technology Chicago.

Julian Manoilov

Marketing Lead

Julian joined Leverage Shares in 2018 as part of the company’s primary expansion in Eastern Europe. He is responsible for web content and raising brand awareness.

Julian has been academically involved with economics, psychology, sociology, European politics & linguistics. He has experience in business development and marketing through business ventures of his own.

For Julian, Leverage Shares is an innovator in the field of finance & fintech, and he always looks forward with excitement to share the next big news with investors in the UK & Europe.

Violeta Todorova

Senior Research

Violeta joined Leverage Shares in September 2022. She is responsible for conducting technical analysis, macro and equity research, providing valuable insights to help shape investment strategies for clients.

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Oktay Kavrak

Head of Communications and Strategy

Oktay joined Leverage Shares in late 2019. He is responsible for driving business growth by maintaining key relationships and developing sales activity across English-speaking markets.

He joined Leverage Shares from UniCredit, where he was a corporate relationship manager for multinationals. His previous experience is in corporate finance and fund administration at firms like IBM Bulgaria and DeGiro / FundShare.

Oktay holds a BA in Finance & Accounting and a post-graduate certificate in Entrepreneurship from Babson College. He is also a CFA charterholder.

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