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High CPI inflation doesn't deter Fed rate cut hope

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  • Stocks mixed after hotter-than-expected inflation report
  • Markets believe the Fed will begin cutting rates around midyear.

 

Source: Fred

On Tuesday, markets digested CPI inflation data for the month of February, which came in slightly ahead of expectations for the second month in a row. U.S. headline CPI rose by 3.2% year-over-year in February, above last month’s 3.1% reading and consensus expectations for a 3.1% rise.

Core CPI, which excludes food and energy, rose by 3.8% year-over-year, down from the January reading of 3.9% but above consensus expectations for a 3.7% rise.

Looking underneath the surface, food prices and areas like motor vehicle insurance continue to climb.

However, energy prices have eased broadly, as have used car prices, providing some relief for consumers. Notably, shelter and rent prices in the CPI basket remain elevated.

On a month-over-month basis, core CPI rose by 0.4%, above expectations for a 0.3% gain.

This reading marks the 2nd consecutive month of hotter-than-expected CPI inflation, which could create some uncertainty around the timing of the Fed’s interest rate cuts.

Stocks close higher, S&P 500 notches fresh record

US stocks closed with significant gains on the CPI Day but experienced a slight decline the following day. The S&P 500 hit a new record close, undeterred by consumer price data, as investors continued to hope for reductions in interest rates in the near future.

The market expectations still give the Fed a roughly 60%[1] probability of delivering its first rate cut at the June meeting.

 

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. cmegroup

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Violeta Todorova

Senior Research

Violeta è entrata a far parte di Leverage Shares nel settembre 2022. È responsabile dello svolgimento di analisi tecniche e ricerche macroeconomiche ed azionarie, fornendo pregiate informazioni per aiutare a definire le strategie di investimento per i clienti.

Prima di cominciare con LS, Violeta ha lavorato presso diverse società di investimento di alto profilo in Australia, come Tollhurst e Morgans Financial, dove ha trascorso gli ultimi 12 anni della sua carriera.

Violeta è un tecnico di mercato certificato dall’Australian Technical Analysts Association e ha conseguito un diploma post-laurea in finanza applicata e investimenti presso Kaplan Professional (FINSIA), Australia, dove è stata docente per diversi anni.

Julian Manoilov

Marketing Lead

Julian è entrato a far parte di Leverage Shares nel 2018 come parte della prima espansione della società in Europa orientale. È responsabile della progettazione di strategie di marketing e della promozione della notorietà del marchio.

Oktay Kavrak

Head of Communications and Strategy

Oktay è entrato a far parte di Leverage Shares alla fine del 2019. È responsabile della crescita aziendale, mantenendo relazioni chiave e sviluppando attività di vendita nei mercati di lingua inglese.

È entrato in LS da UniCredit, dove è stato responsabile delle relazioni aziendali per le multinazionali. La sua precedente esperienza è in finanza aziendale e amministrazione di fondi in società come IBM Bulgaria e DeGiro / FundShare.

Oktay ha conseguito una laurea in Finanza e contabilità ed un certificato post-laurea in Imprenditoria presso il Babson College. Ha ottenuto anche la certificazione CFA.

Sandeep Rao

Research
Sandeep è entrato a far parte di Leverage Shares nel settembre 2020. È responsabile della ricerca sulle linee di prodotto esistenti e nuove, su asset class e strategie, con particolare riguardo all’analisi degli eventi attuali ed i loro sviluppi. Sandeep ha una lunga esperienza nei mercati finanziari. Iniziata in un hedge fund di Chicago come ingegnere finanziario, la sua carriera è proseguita in numerose società ed organizzazioni, nel corso di 8 anni – da Barclays (Capital’s Prime Services Division) al più recente Index Research Team di Nasdaq. Sandeep detiene un M.S. in Finanza ed un MBA all’Illinois Institute of Technology di Chicago.

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