videopokerslotmachine| Just look at Wednesday's CPI, and the global market has changed!

Source: Wall Street

The upcoming US April CPI data on Wednesday is the focus of the market this week. Analysts believe that Wednesday's CPI data is crucial to shaping the Fed's policy and the outlook for global financial markets, which may usher in a changing inventory.

CPI is expected to ease in April

CPI is widely expected to ease in April, and some prominent trading departments warn investors that they should be prepared for a possible break in calm in the stock market. Some analysts believe that whether the market can continue to rebound may depend on whether investors hold a positive attitude towards interest rate cuts after the release of CPI data.

Analysts at JPMorgan said the S & P; would fluctuate 1 per cent in either direction after the release of the CPI data on Wednesday. "the key risk is the overheating of CPI data," analysts said. But the upcoming macro data create two-way risks-concerns about inflation driven by unexpectedly strong growth on the one hand and recession or 'stagflation' fears caused by weaker growth on the other. "

Other analysts believe that the stock market may be able to withstand higher inflation, given that further interest rate increases have been excluded. The expected data should also be positive for the market, removing the barrier to inflation, at least in the short term.

Previously, analysts at Morgan Stanley and Standard Chartered thought Wednesday's CPI data would be lower than expected.

Seth Carpenter, chief economist at Morgan Stanley, points out that housing inflation accounts for 40% of core CPI and 18% of core PCE, so no matter where housing inflation goes, the entire CPI data is likely to follow.

The bank believes that the current rent data is very weak and that despite the surge in immigration last year, vacancy rates in multi-family apartments are approaching record highs, housing inflation has signalled a downside, and US CPI will be "significantly lower than expected" on Wednesday. In addition, due to previous seasonal adjustments, the inflation figure for the first quarter was higher than the actual situation, which will be corrected at a later stage.

Standard Chartered Bank analysts have previously said that housing inflation may soon decline, and pull core inflation down.

The return of "soft landing trade"

Many investors believe that if inflation slows, US Treasuries will have more room to rise than US stocks. Although equities are close to historical records, the yield on 10-year Treasuries is still well above the level below 4 per cent at the start of the year.

Persistent inflation has plagued investors in recent months. Traders bet that interest rates could be cut up to six times in early 2024, but then because CPI continued to exceed expectationsVideopokerslotmachineThey had to scale back these bets quickly. That shook stocks in April and pushed bond yields to their highest level since November.

Many investors said the April jobs report allayed some of their concerns because the colder labor market should eventually lead to more modest price growth. For now, only actual inflation data are needed to support this.

Gennadiy Goldberg, head of US interest rate strategy at TD Securities, said: "the CPI report is likely to greatly boost the idea that a rate cut is imminent."

The analysis shows that there is a close relationship between stocks and bonds. Treasury yields are largely influenced by investors' expectations of short-term interest rates set by the Fed. Share prices, in turn, are affected in part by investors measuring the risk-free return on holding Treasuries at maturity.

The Dow is up 4% this month.Videopokerslotmachine.3%, only 1% below the record high set at the end of March. The rise in bond prices has made the yield on the 10-year Treasury note up from 4% at the end of April.Videopokerslotmachine.7% dropped to 4.479%.

Bond returns have been disappointing over the past few years as interest rates have risen more than investors expected and lasted longer than expected. Still, whenever there are signs of inflation easing, investors are quick to buy bonds, eager to lock in a yield of 4% and 5% before the fed starts cutting interest rates.

Ed Perks, chief investment officer of Franklin income Investor, said he expects yields on short-term Treasuries to fall by 0.2 to 0.25 percentage points and those on long-term Treasuries to fall by 0.1 to 0.2 percentage points if the data show a slowdown in inflation.

At the same time, he said: "given current stock valuations, it is difficult for stocks to rise significantly." As a result, he added, if inflation is higher than expected again, stocks may have more room to fall.

George Mateyo, chief investment officer of Key Private Bank, said that given that a bad report could hurt both US stock and bond markets, it would still be wise to have unconventional assets-such as real estate, inflation-protected bonds or international equities-as a hedge against renewed high inflation readings.

He said, "VideopokerslotmachineWe think inflation will be a little stubborn. "

The European stock market will also usher in a changing inventory.

According to a research report released by Morgan Stanley, the "Santa Claus" market dominated by bond yield-sensitive stocks that began at the end of 2023 has recently returned, and this week's US CPI data will be a key catalyst for determining the success or failure of the deal.

The research newspaper believes that several historical prerequisites for the recovery of bond yield-sensitive stocks have been met: first, the anti-correlation of stock-bond yields has soared to an all-time high. In addition, the breadth of earnings correction hit bottom / recovery, macro indicators improved, technical oversold, and major repricing of Fed interest rate cut expectations. In addition, credit spreads on some of the most yield-sensitive parts of the market, such as real estate, have narrowed significantly, which is a good leading indicator of stock performance.

However, the most important prerequisite for a sustained rebound in such stocks remains a slowdown in US inflation data. The study said it had seen preliminary signs that the recent lower-than-expected non-farm payrolls data and last week's increase in jobless claims contributed to the initial recovery of yield-sensitive stocks in European bonds.

Still, Wednesday's US CPI data will be a key catalyst. Morgan Stanley expects core CPI growth to slow to 0.29 per cent month-on-month in April (0.36 per cent last time, compared with 0.3 per cent expected), and data in line with or below expectations will drive a sustained rebound in European bond yield-sensitive stocks.

Risk reminder and exemption clause

The market is risky and investment needs to be cautious. This article does not constitute personal investment advice, nor does it take into account the specific investment goals, financial conditions or needs of individual users. Users should consider whether any opinions, opinions or conclusions contained in this article are consistent with their specific circumstances. If you invest accordingly, you will be responsible.