Reward 1000 Tiger-coinsCPI is reported at 8:30 a.m ET (i.e. 8:30 PM SGT) Wednesday, and is expected to show that inflation has finally peaked.
It is important to stock market as Fed’s rate hike decision mainly depends on this key data.
1. CPI in line with expectations?
CPI in June may be the peal this year as food and energy showed significant year-over-year declines in July.
Bloomberg expects CPI at 8.7% in July.
Analysts polled by Reuters forecast inflation at 8.9% in July.
Overall, the CPI for July is likely between 8.7% and 8.9% because of the fall in crude oil prices.
The market forecast for CPI is basically the same, so tonight's focus is mainly on Core CPI.
2. What is Core CPI?
Core CPI is the CPI – energy and food prices.
Core CPI is still expected to be higher than June on a year-over-year basis, gaining 6.1% from June’s 5.9%.
commodity prices andsupply chain issues are not major concerns for July CPI. However, services inflation remain to be a question as housing and the labor market don’t show positive signs.
The recent 2 Bills also means more money circulating in the market.
Aneta Markowska, chief economist at Jefferies said:
You still have a problem with services inflation, and that’s driven by shortages in housing and labor. That’s not going away any time soon, until the Fed manages to destroy demand and that hasn’t happened.
3. The broader market rises to pressure levels - closing up or down tonight?
Jose Torres, senior economist at Intrust Securities, said
The S&P 500 has a "very strong resistance" at 4175, which the index hit and has been retreating since Monday.
4170-4250 has acted as a rally pivot point many times.
In late May rally, $S&P 500(.SPX)$ rose to the pressure level and then fell. If $S&P 500(.SPX)$ can rise above current resistance level (4170-4250), the next strong resistance level will be at 4500/4600.
When the historical CPI data - 9.1% was released last month, the market did not plunge and rose after the bell.
On the flip side, the market won't necessarily rise today even the CPI and core CPI meets expectations.
Will this pullback in US stocks end tonight?
Will you just keep watch or buy the dip when market plunges again?
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Comments
US stocks roared to a stunning close today with all 3 US Indexes closing higher. The Nasdaq index is back into Bull territory and ending the longest Nasdaq bear market since the financial crisis.
This exciting uptrend is all because CPI report shows that inflation has eased to 8.5% in July! The markets are now pricing in a lower interest rate hike.
However we are not out of the woods yet as inflation is still high.
Let's hope this exciting rally will continue and the Bull will be back in no time!
@Tiger_chat @TigerStars