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US CPI Report Set to Influence Fed Decision and Market SentimentUS CPI Data Expected to Show Moderating Price Pressures Ahead of Fed Decision Key Highlights: Expected CPI Rise: The US Consumer Price Index (CPI) is forecast to rise by 3.4% year-over-year (YoY) in May, maintaining the same pace as in April. Core CPI Inflation: Annual core CPI inflation is anticipated to slightly decrease from 3.6% in April to 3.5% in May. Impact on US Dollar and Fed Rate Cut Expectations: The upcoming inflation data could influence the US Dollar value and market expectations regarding a September rate cut by the Federal Reserve (Fed). Detailed Analysis: Upcoming CPI Data Release: The Bureau of Labor Statistics (BLS) is set to publish the highly anticipated Consumer Price Index (CPI) inflation data for May on Wednesday at 12:30 GMT. This report is expected to bring intense volatility to the US Dollar, as any surprises in the inflation figures could significantly impact market expectations for the Federal Reserve's rate cut decisions in September. Inflation Expectations: Overall CPI: Expected to rise by 3.4% YoY in May, consistent with April’s rate. Core CPI: Forecast to inch down to 3.5% YoY from 3.6% in April. Month-over-Month (MoM) Changes: The CPI is anticipated to increase by 0.1% in May, down from a 0.3% rise in April. Core CPI is likely to hold steady at a 0.3% MoM increase. Federal Reserve’s Stance: In a recent moderated discussion, Federal Reserve Chairman Jerome Powell adopted a dovish stance, expressing lower confidence in inflation moving back down and suggesting it is unlikely that the next move would be a rate hike. Powell's comments came just before the April CPI data release, which showed softened headline and core inflation. Labor Market Impact: A strong US labor market report, showing a substantial increase in Nonfarm Payrolls and higher-than-expected Average Hourly Earnings, has tempered market expectations for a September rate cut. Despite earlier optimism for rate cuts, the robust labor data has led markets to reassess the likelihood of such cuts. Banks' Expectations for CPI: Goldman Sachs: Predicts CPI to be at 3.3% year-over-year, slightly lower than the previous month. JP Morgan: Expects CPI to remain stable at 3.4%, indicating no significant change. Morgan Stanley: Anticipates a slight decline to 3.2%, reflecting easing inflation pressures. Bank of America: Foresees CPI at 3.3%, aligning with a gradual slowdown in inflation. Analysts’ Forecasts: According to TD Securities analysts, core inflation is expected to slow to a "soft" 0.3% MoM in May, with the headline likely rising by a softer 0.1% due to a significant decline in energy prices. They also noted a potential for a dovish surprise with an unrounded core CPI forecast of 0.26% MoM. Conclusion: The upcoming US CPI data release is crucial, with potentially significant impacts on the US Dollar and market expectations for Federal Reserve rate cuts. A CPI reading in line with expectations could reinforce current market positions, while any deviation could trigger substantial market volatility. This comprehensive analysis outlines the expectations and potential impacts of the upcoming CPI data, providing valuable insights for market participants.
OANDA:XAUUSDEducation
by SroshMayi
Here's what Wall Street economists expects this week.Federal Reserve Chair Jerome Powell emphasized the need for continued patience in monitoring inflation trends during his remarks at the Foreign Bankers’ Association's annual meeting in Amsterdam on Tuesday. Powell highlighted that while there was some easing of inflation in the U.S. last year, the first quarter showed unexpectedly high inflation rates, which were not anticipated. Despite these challenges, he maintains a cautious optimism that inflation will gradually return to the Fed's target of 2% over the year, though he admitted his confidence has diminished somewhat following the recent data. Powell concluded by stating that the central bank will closely observe incoming inflation data to determine its future monetary policy actions. This week will see an increase in activity with the upcoming release of the U.S. April consumer price index on Wednesday, which is closely watched by economists focusing on potential changes in Federal Reserve policies, particularly the possibility of interest rate cuts before the end of the year. Recent data has shown a disruption in the declining inflation trend from the first quarter, sparking concerns about persistently higher inflation rates and reduced likelihood of monetary easing, according to Sam Bullard, a senior economist at Wells Fargo. In response to these concerns, Fed Chair Jerome Powell has indicated two scenarios that could lead to rate cuts: a reassurance of low inflation rates or a sudden downturn in the labor market. Key events this week include: Consumer Price Index (CPI) for April: Scheduled for release at 8:30 a.m. Eastern on Wednesday. Economists anticipate that the headline CPI inflation will increase by 0.4% for the third consecutive month, with the year-over-year rate possibly moderating to 3.4%, slightly down from 3.5% the previous month. The core CPI, which excludes volatile items like food and energy, might rise by 0.3%, marking the lowest rate since December, with an annual pace expected to decline to 3.6%, a three-year low. Retail Sales for April: Also set for Wednesday at 8:30 a.m. Eastern, where retail sales are expected to show a modest increase of 0.5%, following a strong 0.7% rise in March. Sales excluding autos might increase by just 0.2%, compared to a 1.1% increase the previous month. Adjustments to March's figures could be made, potentially affecting the April growth figures. Weekly Jobless Claims: On Thursday at 8:30 a.m. Eastern, jobless claims are anticipated to decrease by 12,000, offsetting more than half of the previous week's unexpected rise to 231,000, influenced by seasonal employment shifts in New York. Overall, while inflation has shown signs of heating up unexpectedly in the first quarter, economists still forecast a downward trend for the year. The Philadelphia Fed's latest survey suggests that by the fourth quarter, headline inflation could slow to 2.5% annually, with core inflation at 2.7%.
OANDA:SPX500USDEducation
by SroshMayi
How To Trade Gold On CPI News DataAs a Gold Trader understanding and interpreting CPI data is crucial for making informed trading decisions. Here's a guide on how to read CPI data and a trade idea based on potential CPI outcomes: --- Understanding CPI Data: CPI Basics: The Consumer Price Index (CPI) measures changes in the price level of a market basket of consumer goods and services purchased by households. Core CPI: Core CPI excludes volatile items like energy and food, providing a clearer view of inflation trends. Gold's Reaction: Gold is often seen as an inflation hedge. A rise in CPI may lower real interest rates, which can be positive for gold prices. However, gold reacts primarily to strong increases in inflation¹. Trading on CPI Data: High CPI: A higher-than-expected CPI may strengthen the dollar, putting pressure on gold prices. Consider a short position if CPI is significantly above forecasts. Low CPI: A lower-than-expected CPI could weaken the dollar and boost gold prices. In this case, a long position may be favorable⁷. Trade Idea: Entry: Monitor the CPI release. If CPI is higher than expected, enter a short position; if lower, consider going long. TP and SL: Set your take profit (TP) near the next resistance level for long positions or support level for shorts. Place your stop loss (SL) just above the recent swing high for shorts or below the swing low for longs. Position Sizing: Adjust your position size to manage risk effectively, ensuring the SL does not exceed 1-2% of your trading capital. Example Trade Setup: If CPI is high: Short gold with SL above the last swing high and TP at the next significant support level. If CPI is low: Go long on gold with SL below the last swing low and TP at the flag high or next resistance level. Note : Always use proper risk management and adjust your strategy based on the actual CPI data and market reaction. --- Remember , CPI data can cause significant volatility in the gold market. Stay informed and be prepared to act quickly following the data release. Good luck! 📈 Follow for more setups and educational material
FXOPEN:XAUUSDEducation
by itmecrypomania
Interest Rates Trading and Hedging Through a New LensIntroduction In the dynamic world of financial markets, Micro 10-Year Yield Futures stand out as a pivotal tool for traders and investors. These futures offer unique opportunities to navigate the complexities of interest rates, particularly in an environment influenced by key economic indicators. This article delves into how traders can leverage both fundamental economic data and a novel technical analysis approach to optimize their strategies in trading and hedging with these futures. Fundamental Analysis Approach Understanding CPI, PPI, and Unemployment Rate: Consumer Price Index (CPI): This indicator measures the average change over time in the prices paid by consumers for a basket of goods and services. It's a critical gauge of inflation, directly impacting interest rates and, consequently, the yields on Treasury securities. Producer Price Index (PPI): PPI tracks the average change over time in the selling prices received by domestic producers for their output. It's a leading indicator of consumer inflation when producers pass on higher costs to consumers. Unemployment Rate: This key metric reflects the number of unemployed workers as a percentage of the labor force. It’s vital for assessing the health of the economy, influencing monetary policy and interest rates. These indicators, notably their changes, provide crucial insights for active trading, particularly in hedging strategies with Micro 10-Year Yield Futures. For instance, a higher-than-expected CPI or PPI might signal rising inflation, prompting traders to anticipate rate hikes and adjust their positions accordingly. How to incorporate Fundamental Analysis into the trade decision process? When making trading decisions for Micro 10-Year Yield Futures, it's crucial to understand the impact of economic reports on interest rates: Buying (Long) Position Rationale: When CPI, PPI, and Employment Rate (opposite of unemployment) are all increasing (indicated by green color on the chart), it typically suggests an expanding economy and potential inflationary pressures. In such scenarios, interest rates are likely to rise to manage inflation. Hence, buying 10-Year Yield Futures could become a strategic move, anticipating a potential uptick in yields. Selling Existing Long Positions: A decrease in any of these indicators (CPI, PPI, Employment Rate) signals a potential slowdown or less aggressive inflationary pressure. Traders holding long positions might consider selling to lock in profits or prevent losses, anticipating a potential drop in yields. Selling (Short) Position Rationale: If these reports show a decreasing trend (indicated by red color on the chart), it suggests economic contraction or reduced inflationary pressure. Lower interest rates are often introduced to stimulate economic growth in such conditions. Shorting 10-Year Yield Futures could be advantageous as it would benefit from a potential fall in yields. Buying Existing Short Positions: An increase in any of these indicators (CPI, PPI, Employment Rate) signals a potential expanding economy and potential inflationary pressures. Traders holding short positions might consider buying to lock in profits or prevent losses, anticipating a potential rise in yields. Rationale Behind the Rules: These rules are based on the traditional economic relationship between inflation, economic activity, and interest rates. Rising inflation or strong economic growth (indicated by higher CPI, PPI, and Employment Rates) often leads to higher interest rates to prevent the economy from overheating. Conversely, decreasing indicators suggest an economy that might need stimulation, often leading to lower interest rates. By aligning trading strategies with these fundamental economic principles, traders can make more informed decisions, leveraging economic trends to speculate or hedge effectively. Technical Analysis Approach Yield Extremes and Curve Analysis: This approach involves charting and combining the 2-Year and 30-Year yield futures contracts in one chart. Analyzing the relationship between these yields provides insights similar to traditional yield curve analysis in a much more accessible format. Key Indicator: A crossover between the 2-Year and 30-Year rates signifies a substantial shift in market sentiment and economic outlook. How to Incorporate Technical Analysis into the Trade Decision Process? As said, the crossover of yield rates between the 2-year and the 30-year yields is a pivotal event, suggesting significant changes in the yield curve. Here's how to interpret and act on these occurrences: Identifying the Crossover Event: A crossover event occurs when the 2-year yield rate overtakes the 30-year rate, or vice versa. This event is indicative of a significant change in the interest rate environment, reflecting shifts in economic expectations and monetary policy. Trading Strategy Based on Micro 10-Year Prior Price Action: When the crossover occurs, the immediate strategy depends on the recent trend in the Micro 10-Year Yield Futures prices. If the Micro 10-Year Yield was trending upwards prior to the crossover, it suggests bullish sentiment in the shorter term. In this scenario, traders could consider taking a short position, anticipating a potential reversal or bearish shift in the market. Conversely, if the Micro 10-Year Yield was trending downwards, indicating bearish sentiment, traders could consider a long position post-crossover, capitalizing on the potential for a bullish reversal or recovery in prices. Rationale Behind the Trade Rules: The crossover event between the 2-Year and 30-Year yields represents a pivotal shift in market dynamics, often reflecting changes in economic policy, inflation expectations, or investor sentiment. Prior price action in the Micro 10-Year Yield Futures provides a context for these shifts, indicating the market's prevailing trend and sentiment. By aligning trading actions with both the yield curve dynamics (crossover event) and the recent trend of the Micro 10-Year Futures, traders can make informed decisions, leveraging the market's anticipated reaction to these significant economic indicators. Market Outlook and Trade Plan Keeping in mind the below tick and (Average True Range) ATR values, based on our analysis, we could express our market views through the following hypothetical set-ups: Trade Plan for the Fundamental Analysis Approach: ENTRY: Wait for the next CPI, PPI and Employment Rate reports and consider executing a trade if all 3 reports are either positive (long) or negative (short). STOP LOSS: Located 1 Monthly ATR away from the entry price Trade Plan for the Technical Analysis Approach: ENTRY: The crossover may confirm itself at the end of the day. Wait for such confirmation and consider executing a short trade once confirmed. STOP LOSS: Located 1 Monthly ATR away from the entry price Tick Value: 0.001 Index points (1/10th basis point per annum) = $1.00 Monthly ATR: The average volatility is measured as 0.509 at the time of this report Trade Example: If the 2-Year yield rises above the 30-Year yield amid rising CPI, consider a short position anticipating rate hikes. Reward-to-Risk Ratio: Calculate this ratio to ensure a balanced approach to potential gains versus losses. Risk Management in Futures Trading Effective risk management is paramount. Utilize stop-loss orders and consider hedging techniques to mitigate potential losses. Understand the significance of economic reports and yield curve shifts in making informed decisions. Conclusion Micro 10-Year Yield Futures offer a versatile platform for interest rate trading and hedging. By combining monthly economic updates with a unique yield curve analysis approach, traders can navigate these markets with greater confidence and strategic foresight. When charting futures, the data provided could be delayed. Traders working with the ticker symbols discussed in this idea may prefer to use CME Group real-time data plan on TradingView: www.tradingview.com This consideration is particularly important for shorter-term traders, whereas it may be less critical for those focused on longer-term trading strategies. Disclaimer: The trade ideas presented herein are solely for illustrative purposes forming a part of a case study intended to demonstrate key principles in risk management within the context of the specific market scenarios discussed. These ideas are not to be interpreted as investment recommendations or financial advice. They do not endorse or promote any specific trading strategies, financial products, or services. The information provided is based on data believed to be reliable; however, its accuracy or completeness cannot be guaranteed. Trading in financial markets involves risks, including the potential loss of principal. Each individual should conduct their own research and consult with professional financial advisors before making any investment decisions. The author or publisher of this content bears no responsibility for any actions taken based on the information provided or for any resultant financial or other losses.
CBOT_MINI:10Y1!Education
by traddictiv
the inflation data (CPI) will be released. the inflation data (CPI) will be released. Current: 3.2%, average forecast: 3.6%, expected to increase. Consumer Price Index Expectations for Financial Institutions (Inflation): (Lowest: 3.5% Highest: 3.7%) Visa 3.5% Canadian Imperial Bank 3.5% Goldman Sachs 3.6 Bloomberg 3.6% JP Morgan 3.6% Mr. Wolf Capital 3.6% Morgan Stanley 3.6% Royal Bank 3.6% Scotia bank 3.6% TD 3.6% Wells Fargo 3.6% Barclays 3.7% Nomura 3.7% City 3.7% HSBC 3.7% UPS 3.7% -average 3.6%
XETR:DAXEducation
by Evar_Mayi
CPI (Scenarios and Affect )United States - Consumer Price Index CPI-Consumer Price Index quantifies the rate of inflation (ie the rate of change in prices) from the perspective of consumers when they purchase goods and services. The upward trend has a positive effect on the country's currency, USD. The consumer price index is one of the most watched indicators by currency traders and is a basic indicator for determining financial inflation and buying trends in society in the United States. The main goal pursued by the central bank is to achieve price stability. Thus when the central bank wants to fight inflation, the reaction of the bank is to raise the interest rate to help prices fall. Higher interest rates attract foreign investment, thus increasing the demand for the country's currency. The all-important U.S. consumer price index for July is due out Today, giving investors a fresh chance to judge the trajectory of inflation in the world's largest economy and update their estimates for Federal Reserve policy decisions Economists predict that the headline measure climbed by 3.3% year-on-year, accelerating from 3.0% in June. However, an atypically soft corresponding figure in July 2022 suggests that markets may not place too much importance on the quickening pace. CPI expectations for financial institutions after two hours inflation announcement: (Highest: 4.1%, Lowest: 3.1%) - Wolf Capital 4.1% - Scotia Bank 3.1% - Standard Chartered 3.1% - Goldman Sachs 3.2% - Barclays 3.2% - Canadian Imperial Bank 3.2% - HSBC 3.2% - UPS 3.2% - Bank of Montreal 3.3% - Bloomberg 3.3% - City 3.3% - Credit Suisse 3.3% - Morgan Stanley 3.3% - Royal Bank 3.3% - Visa 3.3% - JPMorgan 3.4% ⬆️ which means quiet rise ⬇️ which means quiet decline ⬆️⬆️⬆️ it means violent rise ⬇️⬇️⬇️ t means violent decline ❗️be careful and trade safe ❗️ what is your opinion ?? If this post was useful to you , don't forget to like and comment , Thanks ❤️
OANDA:XAUUSDEducation
by Arazmajeed
Deciphering Divergent Signals The Complex Economic LandscapeThe global economy continues to face profound uncertainties in the wake of COVID-19's massive disruptions. For policymakers and business leaders, making sense of divergent signals on jobs, inflation, and growth remains imperative yet challenging. In the United States, inflation pressures appear to be moderately easing after surging to 40-year highs in 2022. The annual Consumer Price Index (CPI) declined to 3% in June from the prior peak of 9.1%. Plunging gasoline and used car prices provided some consumer relief, while housing and food costs remained worryingly elevated. Core CPI, excluding food and energy, dipped to 4.8% but persists well above the Fed’s 2% target. Supply chain improvements, waning pandemic demand spikes, and the strong dollar making imports cheaper all helped cool inflation. However, risks abound that high prices become entrenched with tight labor markets still buoying wages. Major central banks responded with substantial interest rate hikes to reduce demand, but the full economic drag likely remains unseen. Further supply shocks from geopolitics or weather could also reignite commodity inflation. While the direction seems promising, the Fed vows ongoing vigilance and further tightening until inflation durably falls to acceptable levels. The path back to price stability will be bumpy. Yet even amidst surging inflation, the US labor market showed resilience through 2022. Employers added over 4 million jobs, driving unemployment down to 3.5%, matching pre-pandemic lows. This simultaneous inflation and job growth confounds historical norms where Fed tightening swiftly slows hiring. Pandemic-era stimulus and savings initially cushioned households from rate hikes, sustaining consumer demand. Early retirements, long COVID disabilities, caregiving needs, and possibly a cultural rethinking of work also constricted labor supply. With fewer jobseekers available, businesses retained and attracted talent by lifting pay, leading to nominal wage growth even outpacing inflation for some months. However, the labor market's anomalous buoyancy shows growing fragility. Job openings plunged over 20% since March, tech and housing layoffs multiplied, and wage growth decelerated – all signals of softening demand as higher rates bite. Most economists expect outright job losses in coming months as the Fed induces a deliberate recession to conquer inflation. Outside the US, other economies show similar labor market resilience assisted by generous pandemic supports. But with emergency stimulus now depleted, Europe especially looks vulnerable. Energy and food inflation strain household budgets as rising rates threaten economies already flirting with recession. Surveys show consumer confidence nosediving across European markets. With less policy space, job losses may mount faster overseas if slowdowns worsen. Meanwhile, Mexico’s economy and currency proved surprisingly robust. Peso strength reflects Mexico’s expanding manufacturing exports, especially autos, amid US attempts to nearshore production and diversify from China reliance. Remittances from Mexican immigrants also reached new highs, supporting domestic demand. However, complex immigration issues continue challenging US-Mexico ties. The pandemic undoubtedly accelerated pre-existing workforce transformations. Millions older employees permanently retired. Younger cohorts increasingly spurn traditional career ladders, cobbling together gig work and passion projects. Remote technology facilitated this cultural shift toward customized careers and lifestyle priorities. Many posit these preferences will now permanently reshape labor markets. Employers clinging to old norms of in-office inflexibility may struggle to hire and retain talent, especially younger workers. Tighter immigration restrictions also constrain domestic labor supply. At the same time, automation and artificial intelligence will transform productivity and skills demands. In this context, labor shortages could linger regardless of economic cycles. If realized, productivity enhancements from technology could support growth with fewer workers. But displacement risks require better policies around skills retraining, portable benefits, and income supports. Individuals must continually gain new capabilities to stay relevant. The days of lifelong stable employer relationships appear gone. For policymakers, balancing inflation control and labor health presents acute challenges. Achieving a soft landing that curtails price spikes without triggering mass unemployment hardly looks guaranteed. The Fed’s rapid tightening applies tremendous pressure to an economy still experiencing profound demographic, technological, and cultural realignments. With less room for stimulus, other central banks face even more daunting dilemmas. Premature efforts to rein in inflation could induce deep recessions and lasting scars. But failure to act also risks runaway prices that erode living standards and stability. There are no easy solutions with both scenarios carrying grave consequences. For business leaders, adjusting to emerging realities in workforce priorities and automation capabilities remains imperative. Companies that embrace flexible work options, prioritize pay equity, and intelligently integrate technologies will gain a competitive edge in accessing skills and talent. But transitions will inevitably be turbulent. On the whole, the global economy's trajectory looks cloudy. While the inflation fever appears to be modestly breaking, risks of resurgence remain as long as labor markets show tightness. But just as rising prices moderate, the delayed impacts from massive rate hikes threaten to extinguish job growth and demand. For workers, maintaining adaptability and skills development is mandatory to navigate gathering storms. Any Coming downturn may well play out differently than past recessions due to demographic shifts, cultural evolution, and automation. But with debt levels still stretched thin across sectors, the turbulence could yet prove intense. The path forward promises to be volatile and uneven amidst the lingering pandemic aftershocks. Navigating uncertainty remains imperative but challenging.
TVC:US10YEducation
by BitcoinMacro
5
Stay cautious of a PEAK/TOP in the markets today.My SPY Cycle Patterns suggest the markets will establish a PEAK/TOP today - then trend downward. I created this video to help my followers stay aware of the short-term nature of price in a reactionary price trend - like today. If you are chasing this rally, stay very cautious of risks related to my SPY cycle patterns. Overall, I expect the markets to peak, stall, then trend downward over the next 48 hours. Take quick trades with targeted profit targets. This is not a friendly market uptrend in my opinion. I believe the $408 level is a likely downside price target for the SPY by Thursday. Follow my research
AMEX:SPYEducation
by BradMatheny
4
CPI & Inflation Rate USHello everyone! Let's take a look on what happened yesterday on the US financial market and understand the impact of CPI and inflation rate. The Consumer Price Index (CPI) and inflation news from the United States can have a significant impact on financial markets and the value of the U.S. dollar. The CPI measures the change in the price of a basket of goods and services consumed by households, and inflation is the rate at which the general level of prices for goods and services is rising. When the CPI and inflation numbers are higher than expected , it can indicate that the economy is growing, which can boost stock prices, lead to higher interest rates, and appreciate the dollar. This is because as the economy grows, companies will see increased demand for their products and services, which can lead to higher profits and stock prices. Higher interest rates can also attract more investors to bonds, which can lead to higher bond prices. Additionally, a strong economy can lead to increased demand for U.S. goods and services, and increased foreign investment in the U.S. economy. As a result, the demand for dollars increases, which can lead to an increase in the value of the dollar. On the other hand, if the CPI and inflation numbers are lower than expected , it can indicate that the economy is slowing down , which can lead to lower stock prices, lower interest rates and depreciation of the dollar. This is because as the economy slows down, companies will see decreased demand for their products and services, which can lead to lower profits and stock prices. Lower interest rates can also lead to less investors in bonds, which can lead to lower bond prices. Additionally, a weak economy can lead to decreased demand for U.S. goods and services, and decreased foreign investment in the U.S. economy. As a result, the demand for dollars decreases, which can lead to a decrease in the value of the dollar. It's important to note that the Federal Reserve uses inflation as an indicator to change the monetary policy, as they use interest rates as a tool to control inflation. Typically if inflation is too high, the Fed will increase interest rates to slow down the economy and curb inflation, and if inflation is too low, the Fed will decrease interest rates to stimulate the economy. These monetary policy decisions can also have an impact on the value of the dollar, as when the Fed raises interest rates, it can make the U.S. a more attractive place to invest, which can lead to an appreciation of the dollar. Conversely, when the Fed lowers interest rates, it can make the U.S. a less attractive place to invest, which can lead to a depreciation of the dollar.
ECONOMICS:USCPIEducation
by m_maia14
Inflation Report: 11 Jan 2023Finally there is a sense of relief. The US inflation is just on a some-what downward spiral. It's almost as if we peaked at a whopping 9.1% and now dropping to around 6%. And let's not forget all our friends abroad, like Germany where it's dropped from 10. 4 in October down to 8.6%, UK dropping from 11.1% slightly down to 10.7%, Canada's 8.1 dropped to 6.8%, France's steady 6.2%, and China's decent1.6%. And let's not forget our lekker country, South Africa where inflation has also dropped from 7.8% down to 7.4%. It's just too bad all these numbers are due to supply chain issues, war, and food shortages. But it looks like we have potentially seen the end of The Great Inflation - and now things should start to settle. Your thoughts? Trade well, live free Timon (Trader since 2003)
ECONOMICS:USCCPIEducation
by Timonrosso
Number of Sunspots and Inflation CYCLESHi friends Today im going to explain about the relationship between Sunspot Numbers and Inflation rate from 1960 to now. so lets start with inventor of this theory : William Stanley Jevons's In 1875 and 1878 Jevons read two papers before the British Association which expounded his famous "sunspot theory" of the business cycle. Digging through mountains of statistics of economic and meteorological data, Jevons argued that there was a connection between the timing of commercial crises and the solar cycle. it called 5.31-Year Cycle too. In the stock market and in the economy, there are both natural frequencies and artificial excitation frequencies. The four-year presidential election cycle is a great example of an excitation frequency, and it has demonstrable effects on stock prices. The schedule of FOMC meetings 8x per year is another possible example of an artificial excitation frequency. When a demonstrable cycle period appears that one cannot tie to some manmade excitation frequency, then the supposition is that it is a "natural" frequency of the economic system. Something about the economy or the market results in an oscillation on a certain frequency which may not have a good outside explanation. Perhaps it is in how money flows. Perhaps it is in how human brains make decisions about surplus and scarcity. It is hard to know. This 5.31-year frequency in the CPIs cycle seems to fall into that category as a natural cycle, because the 5.31-year period does not match any known excitation frequency related to human activity nor the economic calendar. So that makes it probably a natural frequency. In above chart , there does seem to be a relationship between sunspots and the inflation rate. We see lots of instances when the peak of the sunspot cycle coincided with the peak of the inflation rate. There have been spikes in the inflation rate not tied to the sunspot cycle, such as the spike during the Arab Oil Embargo of 1973-74. this examples did, interestingly, come at the halfway point of the sunspot cycle, fitting the half-period harmonic principle(5.31 year cycle). The current rise in inflation fits both the longstanding 5.31-year cycle and the upswing in the sunspot cycle. Solar researchers expect the current sunspot cycle rise to end in July 2025, which is 3 years from now. But the 5.31-year cycle says a top in the inflation rate is expected right now. That would mean seeing the inflation rate bottoming around 2025 just as the sunspot cycle is peaking. Sometimes cycles present us with conflicts that are hard to reconcile. The point of the 5.31-year cycle that we can take away for right now is that the inflation rate should be falling for the next ~2.2 years. But that does not mean we get to zero percent inflation right away. The drops take a while to unfold. Inflation is likely with us for a while, and we have to get used to that idea.
ECONOMICS:USIRYYEducation
by TraderAmin-KZ
2
impact of two important following news on DXYTwo important factors that been driving Dollar prices in last several month as we all know is Federal Funds Rate and Inflation data like CPI. In this week we have both of them coming out on Tuesday and Wednesday, now we want to see how it can affect the market. Price usually tend to be at important resistive or supportive areas at the time of important news hit the market and as we can see now price is at supporting area and at the Daily low which probably will remain here until the news hit the market so we can expect of low volatility movement on USD and other major crosses, But what will happen when the news releases? As we know CPI balance is curving to downside and shows that inflation is cooling down and as we see the prediction of tomorrow CPI news we can see that the market expect this trend to continue. Now here is the tricky part, if CPI data put out like prediction or lower than the prediction this means that fed has the inflation under control which makes trader to believe that federal reserve would not need to raise prices very aggressively like before and as a result we may see a risk on environment in the market which can lead Dollar prices to come lower, but on the other hand SPX, TLT, EUR,JPY and also commodity currencies like AUD,NZD to take benefit from the situation. But if CPI data comes out higher than expectation then we can argue that federal reserve do not have inflation under control so it needs to continue hiking prices like before and this situation may lead to higher prices for Dollar and lower prices for all the other assets that we covered above. Also if the second scenario take place tomorrow we can expect USYIELD to continue going higher which have negative effect on US treasury bond and very bad effect on SPX index. Put CPI analysis apart the other important news that can shake prices real hard is federal reserve which going to hit the market on Wednesday. On that time we can see that what exactly is in the mind of federal reserve and how they are going to impact the economy. In overall, if they raise rate same or below the expectation its going to be very good for risky assets since it shows that we are getting close to end of rate hiking cycle but if federal reserve going for raising rate higher than expectation then it will have a very good impact on Dollar but bad impact on risky assets.
TVC:DXYEducation
by mohemati
Inflation Slowing, but Still a Concern for the Federal ReserveInflation in the United States, as measured by the consumer price index (CPI), is expected to have slowed again in November. This is due in part to a weaker economy, which has reduced inflation pressures. However, the expected 0.3% increase in the CPI is not enough to ease concerns at the Federal Reserve or prevent the central bank from raising interest rates even higher to slow the economy. Gas prices have fallen since the summer, reversing the spike in spring that sent inflation to a 40-year high. As a result, the cost of living has risen more slowly in the past four months. If the forecast is accurate, the annual rate of inflation would taper off to 7.3% from 7.7% in October and a peak of 9.1% in June. The core rate of inflation, which excludes food and gas, is also forecast to rise 0.3% in November. This is still higher than the monthly gains that were the norm before the pandemic. The yearly rate of core inflation may fall slightly to 6.1% from 6.3% in the previous month. The rate peaked at 6.6% in November. The increase in the cost of goods, excluding energy, has relaxed to 5% in October from 12.4% in February. However, the increase in the price of services continues to accelerate. The cost of services, excluding energy, has risen 6.8% in the past year. This is due in part to the increasing cost of labor, which is the biggest expense for most service-oriented businesses. Rents have jumped 7.5% in the past year, marking the biggest surge since 1982. Rents are starting to decrease as the economy slows, but the Fed and Wall Street are watching for clear evidence of a reversal. Even if rents and home prices level off, the change may not immediately show up in the CPI report.
OANDA:SPX500USDEducation
by JoelWarby
Yield curve inversion, CPI, GDP and DOWHistorically, an inverted yield curve has been viewed as an indicator of a pending economic recession; hence the inversion of the yield curve might be perceived as a leading indicator. Once the yield curve is inverted, it may be several months before we see GPD contracting; and it is not guaranteed that we will see a sharp drop in GDP. First pane: You can see the development of GDP and the associated development of the Dow Jones Index (log-scale). The area below you shows the US 10-year/2-year yield (bubbles indicate a yield curve inversion). As you can see, it might be some time before we see a GDP contraction after the yield curve inverts. The last area shows the core CPI that drove the Fed and expected higher dot plot medians in December. Nonetheless, recent data suggests that the core CPI may have peaked (to be confirmed).
TVC:US10YEducation
by Chimbarosa
Inflation & Interest Rate Series – Below 5.3% is Crucial for CPIContent: • Why CPI must be below 5.3%? • Can we invest or trade or hedge into inflation? Disclaimer: • What presented here is not a recommendation, please consult your licensed broker. • Our mission is to create lateral thinking skills for every investor and trader, knowing when to take a calculated risk with market uncertainty and a bolder risk when opportunity arises. Stay tuned for our next episode in this series, we will discuss more on the insight of inflation and rising interest rates. More importantly, how to use this knowledge, turning it to our advantage in these challenging times for all of us. Micro 5-Year Yield Futures 1/10 of 1bp = US$1 or 0.001% = US$1 3.000% to 3.050% = US$50 3.000% to 4.000% = US$1,000 See below ideas on the previous videos for this series.
Editors' picks
CBOT_MINI:5YYU2022Education
by konhow
4
Why Crude Oil is Trending Higher Again, Breaking Above US$100In this tutorial, I will explain both its fundamental and technical reasons for crude oil likely to break above and stay above US$100. I am having two portfolios at all times, one for long-term investing and the other for short-term trading. For the long-term I am mindful the current global inflationary pressure is real and it may last many months or even years ahead. Therefore, my current investment mandate: • U.S. stock markets – To trade them • Commodities – To buy them Disclaimer: • What presented here is not a recommendation, please consult your licensed broker. • Our mission is to create lateral thinking skills for every investor and trader, knowing when to take a calculated risk with market uncertainty and a bolder risk when opportunity arises. For your reference: NYMEX Crude Oil $0.01 = US$10 Example: From $94.00 to $100.00 (10000-9400) x US$10 = US$6,000
NYMEX:CL1!Education
by konhow
1
Global Market Reacts Positively Amid Reduced U.S Inflation RateGlobal Market Reacts Positively Amid Reduced U.S Inflation Rate Compared to June, the annual rate of inflation reduced marginally to 8.5%. Bitcoin is trading at $24,003 with a 4% increase in the last 24 hours. After a long period of stagnation, U.S inflation has fallen for the first time since April. Compared to June, the annual rate of inflation reduced marginally to 8.5%, according to the most recent statistics release. The July CPI was projected to be 8.7%. Well, it’s possible that a decline in inflation may be a beneficial thing since it would help dilute the Fed’s aggressive position and lead to lower interest rates. The main indexes, which had ended Tuesday’s session in the negative, responded favorably to this new information. The Dow Jones Industrial Average’s futures soared by 400 points, or 1.2%, on Monday morning. S&P 500 futures rose by 1.7%, while Nasdaq 100 futures rose by 2.4% in tandem. Market Gains Momentum In reality, the crypto market, which had been in the red for the previous several hours, has now turned green. Recently, though, the link between Bitcoin and the larger market has declined. This suggests that the markets have not always moved in lockstep with one another. The tables may turn in the future, and we may see a collective infusion of liquidity, just as we have seen shock spread from one sector to another thus far. However, this may not happen right away since the crypto market has been ready for a drop for some time. Since Ethereum and other cryptocurrencies are gaining ground, Bitcoin is following suit. Bitcoin is trading at $24,003 with a 4% increase in the last 24 hours as per CMC. In addition, exchange inflows have been increasing during the previous several days. Merely 10.8k BTC were sent to exchanges on August 7th, according to statistics from CryptoQuant. The 36.7k BTC figure on Tuesday, on the other hand, reveals a shift in mood.
Education
by TheNewsCrypto
11
How Inflation Affects Our Savings & Our LivesFor the past few months, we’ve heard a lot in the news about increasing living costs. The cost of our essential goods and services – from our food to our electricity bills, housing, and electronics – is constantly rising. And our salary increases (if any) aren’t enough to cover the increasing cost of our basic expenses. I wanted to write this article for several reasons. I’m not trying to paint a gloomy picture, but rather to help people better understand the situation and how increasing prices affect our lives. So, as trivial as it may sound, let’s start with the basics and the basic definition of inflation. What Is Inflation? Inflation is the decline of the purchasing power of a currency over time measured amongst a pre-selected basket of goods. Now, here’s where it gets more interesting. The root cause of inflation is an increase in the supply of money in an economy. Our local monetary authorities (Central Banks and Governments) can increase the money supply, either by printing and giving away more money to individuals, by legally devaluing the currency, or by loaning new money into existence and purchasing government bonds from banks on the secondary market. In all such cases, the supply of money increases. Thus, your living expenses increase, your purchasing power decreases, and you get less for your money. There are some exceptions to this – but we will get into that a bit later when we look at possible solutions to this phenomenon. So, now, let’s review what we’ve seen for the past year, how inflation has affected our lives, and what our governments and central banks have done about it. What Are Governments Doing? Europe – The EU member countries agreed on a Pandemic Emergency Program. It’s designed to support the economies of member countries, and it’s worth 1.8 trillion euros. That’s a little over 2 trillion dollars. America – The US has several programs designed to help its economy. The first was a 3 trillion dollar program designed to help the US overcome the difficulties of the COVID19 pandemic. There are also several other programs going to the Senate for approval, all of which will further fuel the current inflationary cycle. What Level Of Inflation Are We Currently Experiencing? Well, this is a great question. It’s also a bit tough to answer. You might think that the easiest way to measure price increases is by comparing prices at the grocery store, at the petrol station, or with your landlords. And that makes sense. But you might not all see the same level of inflation from one item to the next. This is because the official inflation figures are calculated slightly differently, and they’re based on a so-called basket of goods. In the US, this “basket of goods” is managed by the Central Statistical Office. They decide what items to include in the basket and how often to change them. So, when the US inflation was calculated at 7.00% last week (the highest recorded rate in the last four decades), this was based on that specific basket of goods. That said, we’re seeing sharp increases in the official inflation data in many countries – with the UK hitting 5.40%, 5.70% for Germany, and 36% for Turkey. This means, regardless of each country’s chosen ‘baskets’, consumers worldwide are experiencing sharp measurable price increases. The more we get into the new year, the more we find ourselves asking when this vicious cycle will end. Experts are yet to agree on what kind of inflation we’ll see in the months ahead. However, the one thing that they all seem to agree on is that inflation is here to stay for the next two to five years. What Can We Do To Protect Our Savings And Plan For A Better Financial Future? There are a few options that you can consider. For those of you who prefer to take a more traditional approach towards money, well, these options might not be for you. But let’s explore all the options available to you, regardless of your age: 1 – Savings accounts If this has worked for you previously, I’m sorry to tell you that it might not work this time. Unfortunately, putting your money in a savings account is unlikely to be your best option when it comes to protecting your savings and your hard-earned money. This is because of the meagre interest rates on offer. When measured against the official inflation figures, with a 1% interest rate, you are still likely to be losing at least 4% – 5% of your actual purchasing power. While the official inflation figures might be around 7%, the level of inflation for your specific purchases could be as high as 12% to 15%. For simplicity of calculation, let’s look at an example. Say you had 100,000 USD or EUR in a savings account with your favourite bank, you would be making a whopping 1,000 USD or EUR in interest in a year (that’s assuming you are lucky enough to get a 1% interest rate from your bank). With inflation ranging between 12% to 15%, this means that you will be down between 11% to 14%. That’s a loss of about 11,000 to 14,000 USD or EUR per year. You won’t see that reflected in your bank account as numbers, but you will feel it when you go out to purchase goods. And let’s not forget that we are entering the 2nd year of high inflation – and that means twice the potential loss in buying power. 2 – Real estate In my country, we have a saying that if a person doesn’t know what to do with their money, they put it into real estate. It might still be a good choice; it depends on how you look at money. But with real estate returning between 7% -8% gross per year and with rising maintenance costs, it still might not make up for the 12%-15% increase in inflation. You might help to make a complete evaluation – one that factors in increasing prices and that factors in the size of your investment. If there is further inflation, or if you find yourself in sudden need of money, you may find yourself selling at a less than ideal price. Again, this doesn’t mean that real estate isn’t a good investment; it can be, based on your financial goals and investment horizon. Another thing to consider when evaluating your investment options is your purchasing power. It might help to compare the purchasing power of your investment now with the possible increase in the price of the property in the future. It might also help to keep in mind that if inflation goes up by 20% over three years, for example, then your property will need to go up by more than 20% in value for you to benefit from the investment. 3 – Bonds The FED is on track to raise interest rates in 2022. So, could government bonds be the way forward? 10Y US Treasuries are often considered the benchmark for a risk-free investment. That said, they don’t usually bring high returns. Let’s assume that, in a best-case scenario, you get the kind of high annual return we saw at the beginning of the century (5%-6%). Unfortunately, it still wouldn’t be enough to beat inflation and increase your overall purchasing power. 4 – Precious Metals Precious metals, in particular gold, have always been considered a great way to protect against inflation. One thing to consider: the financial markets haven’t been reacting very well recently to the idea of the Federal Reserve keeping a hawkish mood for the next year to come. In recent years, we have noticed how the inverse correlation between the stock market and gold has partially vanished during “cold” periods of general selloff. To avoid getting liquidated on their positions on stocks, big players would rather start selling massively their positions on assets where they have gained substantial profits, as it could be on gold. The result: massive drops also on the precious metal. This means that the old-fashioned hedge against inflation might have severe volatility in price during a bear market. 5 – Cryptocurrencies Cryptocurrencies are considered the new store of value. They have recently been compared to precious metals and sometimes been referred to as digital gold, especially when we talk about the king of cryptos – Bitcoin. Bitcoin has proven to be a great store of value, providing stellar performances in the past years, closing 2021 with +57%. Investors who have been able to jump on crypto projects at early stages have been able to get stellar returns in the sphere of 3 to 4 digits percentage. The only tiny issue with cryptos is that they require a cold-blooded investor, being able to “hodl” during periods like the current one, where they have been losing across the board more than 50% of the picks. It’s an investment that requires a very high appetite for risk. Be sure to take a look at our blog for more content. And don’t miss out on our free webinars. Next up: “How to protect your crypto investment against adverse market movements”.
ECONOMICS:USCCPIEducation
by Atlas-Horizon
High consumer price inflation is good for borrowers, right? Err…Another Market Myth Exposed The Nasdaq index has now declined by 10% from its November high , prompting the mainstream financial media to call it a “ correction ” whatever that means. I think they call it a bear market when it is down by 20% . Many stocks have already fallen by at least that amount, and realistically, it’s all semantics anyway. It’s early days, but what is curious, though, is that high yield , or junk , bonds continue to hold up. To be fair, junk bonds, as measured by the U.S.$ CCC & Lower-rated yield spread reached peak outperformance in June last year and have underperformed since, but yet there have been no signs, as yet, of any rush out of the sector. I heard an analyst on Bloomberg TV yesterday say that he was bullish of credit, particularly junk, because it does well in an accelerating consumer price inflation environment. The theory is that higher consumer price inflation means that companies can increase prices, thereby increasing revenue in nominal terms. At the same time, though, the amount the company owes via its bonds remains the same, thereby decreasing the debt’s real value and making it easier to service. It’s a win-win situation apparently, and that means junk bonds outperform. The opposite should be true under consumer price deflation. Junk bonds should underperform because, with nominal corporate revenues declining, the value of debt goes up in real terms, making it harder for corporates to service it. OK, I thought, channeling Mike Bloomberg’s mantra of, “ in God we trust, everyone else bring data ” let’s have a look at the evidence. The chart above shows the U.S. dollar-denominated CCC & Lower-rated yield spread versus the annualized rate of consumer price inflation in the U.S . Apart from the period of 2004 to 2006, there’s hardly any evidence to suggest that accelerating consumer price inflation is good for the high-yield corporate debt market. Junk bonds were only just being invented by Michael Milken in the 1970s, and didn’t come into popularity until the 1980s, but we can examine corporate bond performance by looking at the Moody’s Seasoned Aaa Corporate yield spread to U.S. Treasuries. Doing so, reveals that, in the first major consumer price inflation spike, between 1973 and 1975, corporate debt underperformed as the yield spread widened. In the second major consumer price inflation spike, from 1978 to 1980, corporate debt briefly outperformed but then underperformed dramatically, as annualized price inflation reached 13%. It goes without saying, of course, that this analysis is just looking at the relative performance of corporate debt under accelerating consumer price inflation. The nominal performance is another matter. Borrowers and lenders ( bond investors ) both got savaged in the 1970s with the Moody’s Seasoned Aaa Corporate yield rising from 3% to close to 12%. The conclusion we must reach is that the level of consumer price inflation does not matter to relative corporate bond performance. It does, however, matter for nominal performance . More semantics, some may say. What really matters is how it affects one’s wallet.
FRED:BAMLH0A3HYCEducation
by ferGOD
The Top 5 Fundamental Currency DriversThe goal of this article is to understand what really moves the markets. 1. Central Bank Decisions These organizations manage the countries monetary system and policy. They control the countries money supply and operate through specific mandates. Stable inflation is a common mandate applicable to the majority of central banks. Interest rates are a crucial tool used by them to reach their mandates. Changes in interest rates have a tremendous impact on the Forex markets. Rate decisions from central banks can cause lots of volatility. They’re also great opportunities for making money. For this reason, interest rates should be something all Forex traders monitor. Good to start here as a beginner in fundamentals. 2. Economic News Releases News releases like: GDP Gross Domestic Product CPI Consumer Price Index Employment Data like average earnings, NFP, and unemployment Rate could have a huge impact on interest rate decisions and traders always have expectations on these releases if it differs from it market reacts. 3. Geopolitical Events Politicians are an important part of the market moves. Investors seek stable economies, also tax decisions and fiscal policy decisions are drivers of the market. 4. Natural Disasters Things like earthquakes or tsunamis can negatively affect a country’s economy. 5. Intermarket Movements Equities Bonds and Commodities are all connected to each other so one spike in an asset class could lead to moves in the other asset classes too. Things like risk aversion and risk appetite are a daily play on the markets because the risk is a great factor of daily currency moves. Safe haven bids are bonds Japanese yen and Swiss franc in a market crash these assets have money inflows. Hope you enjoyed this small article for more information visit my website vitezabraham.com. Have a Nice day! Vitez
Education
by Vitezabraham