The widely expected U.S. Consumer Price Index was released last week and has shown a significant slowdown since it peaked at 9% in June 2022. The headline annual figure came in at 5.0%, down from 6.0% in February and below expectations of 5.2%. While the annual core inflation, which excludes the volatile food and energy items, ticked higher to 5.6%, as expected.

Headline inflation in the U.S. eased last month to its lowest level in nearly two years, but the uptick in core prices could keep pressure on the Federal Reserve to go ahead with another 25-basis point interest rate increase at their upcoming meeting on the 3^rd of May.

Inflation rates have been decelerating and the Fed’s aggressive interest rate hikes could soon pause. According to some economists, inflation around 5% is no longer considered an emergency issue, which means the Federal Reserve could feel less pressed to keep on with its aggressive interest rate hikes.

The Federal Reserve minutes were also released last week. The main takeaway from the minutes was that the central bank anticipates a mild recession in late 2023. Since November 2022, economists at the Federal Reserve have predicted subdued growth and after the banking crisis in March, that forecast was revised to a recession.

The latest inflation data is one of the most important economic releases ahead of the Fed’s next policy meeting. While there is some progress in the fight against high prices, inflation remains still high, and the labour market is still strong.

Fed officials do not yet appear to have reached a consensus over whether another 25-basis point rate rise will be needed before the central bank pauses. Last month most officials supported an additional increase, which would push the federal funds rate above 5% and forecast no cuts until 2024.

That is in sharp contrast with the current futures market pricing, which suggests the Fed will deliver one last rate hike in May before reversing course and cutting the federal funds rate towards the end of the year.

Earnings season in the U.S. picks up steam with the major benchmark indices trading sideways as investors assess a slew of earnings reports and their implications for the economy.

Source: Tradingview

So far earnings season has proven resilient so far against expectations for declining profits. While results are likely to be largely in-line with expectations, the focus will be on forward guidance and tighter credit conditions.

FactSet data forecasts that Q1 earnings of the S&P 500 will decline by 6.5%, year-on-year, which would mark the second quarterly earnings decline in a row and the largest since the second quarter of 2020.

The rally from the March lows is losing momentum over the past few days weighed down by mixed quarterly results. Investors are searching for direction amid choppy economic data, high interest rates, expectations of upcoming recession and volatility in the market.

While at this juncture in time there is no sign the rally from the March low is reversing direction, the index is approaching its previous resistance of 4,200 and overbought momentum levels, which means it might be challenging to edge higher from here in the short-term.

Active traders looking for magnified exposure to the German share market may consider our 3x Long US 500 and -3x Short US 500 ETPs.

ETPs have revolutionized the way investors gain exposure to a variety of asset classes, making investing more accessible, affordable, and transparent. These investment vehicles offer several benefits that make them an attractive choice for investors.

Investing in ETPs has never been more accessible than it is today. Our ETFs are designed to provide investors with the opportunity to diversify their portfolios and gain exposure to a wide range of assets, all while minimizing risk.

In summary, our ETPs provide a unique investment opportunity for investors looking for diversification, leverage, and liquidity. Don’t miss out on the chance to grow your wealth and achieve your financial goals.