Fed “still on the fence” despite promising inflation data — OptionsDesk

–News Direct–

OptionsDesk broker Rich Perry speaks to Thomas Warner from Proactive London after a pivotal two days in the battle against inflation.

Perry starts by highlighting figures from the UK that showed a fall in inflation to 4.6% but says the really dramatic reaction in the market has been to the US inflation data released the previous day.

He says the US inflation print dropped to 3.27% from 3.7%, surprising the market with a lower figure than the expected 3.3%. To provide a visual understanding, Perry goes through technical analyses on a 15-minute chart, showcasing the immediate market reaction, a subsequent consolidation around highs, and the breach of key technical levels. He then directs attention to a daily chart of the S&P 500, highlighting a gap-up and breaches in the downtrend, emphasising the significance of these moves in the longer-term trend.

Perry goes on to suggest that the market is grappling with more than one path forward—either a continuation of elevated rates or the start of rate cuts. He points out the contrasting reactions of equity and bond investors, highlighting a nuanced response to the data. He introduces the dollar index as a key factor to watch, showcasing the inverse relationship observed.

Perry suggests that the market's expectations for interest rates can be inferred from the relationship between higher interest rates and a stronger dollar. He emphasises the importance of monitoring economic data to gauge the Fed's likely course of action.

Contact Details

Proactive UK Ltd

+44 20 7989 0813

uk@proactiveinvestors.com

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