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Fed Might be at Peak Rates as Inflation Cools

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The annual Consumer Price Index rose 3.2% in October down from 3.7% the prior month, reaching its lowest yearly rate since early 2021 according to data released Tuesday by the Bureau of Labor Statistics. Core CPI, which excludes the volatile food and energy categories, rose 0.2% on a monthly basis, and 4% on an annual basis reaching its lowest level since September 2021.

The Producer Price Index for October showed more signs of slowing inflation, bolstering the case for no more hikes. US wholesale inflation fell 0.5% on a monthly basis, down from the 0.4% jump in September. The decline is also the sharpest monthly drop since April 2020.

According to the CME FedWatch Tool traders are even more encouraged and have taken another hike completely off the table. Futures now assign an 80% probability of a rate cut by May, despite economists warning that it’s unlikely that the Fed will ease monetary policy anytime soon unless economic conditions deteriorate significantly.

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Source: TradingView

The U.S. benchmark experienced severe losses throughout 2022 as the Fed responded to record inflation and hiked the federal funds rate up from near-zero, to 5.25% – 5.5%, the highest level since 2001. Tightening campaigns typically precede recessions as higher borrowing costs cut into corporate profits and dampen consumer spending, but the U.S. economy has exhibited output growth and low unemployment levels throughout 2023.

This week’s stock and bond surge on news of a fresh decline in headline and ‘core’ U.S. consumer price inflation last month. The reports raised hopes the Federal Reserve won’t raise interest rates again during its current tightening cycle, thanks to a significant cooling in inflation. Even though Federal Reserve officials are refusing to fully rule out another interest rate hike traders are now virtually certain that the Fed will hold rates steady at its December policy meeting.

The market rallied to its strongest levels in months this week and while stocks are likely to continue to rise over the medium-term, as they continue to recover from last year’s steep losses, the index could struggle to return to its 2022 highs. In the short-term, a pull back to unwind the overbought momentum conditions can not be ruled out.

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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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