May CPI Index: Will the markets recover?
Traders are at the edge of their seats as we await the big report for the markets this week; the Consumer Price Index report for May 2022, scheduled to be released tomorrow, Friday, 10th June 2022. The report could reveal what we have all guessed — a continued trend that inflation has peaked.
Stocks have struggled to move forward in the past week and with last week’s major sell-off, the major indexes have closed with losses. U.S. stocks were unable to sustain the upward momentum seen at the tail end of May and finished the week slightly lower as sentiment began to sour again. Experts have claimed the current situation is indicative of a bearish market based on the decline of stocks and there is no indication that this phenomenon is looking to change as there are no signs that stocks would close higher.
May’s CPI is projected to be slightly cooler than April’s with the general sentiment across the board implying that it would also confirm inflation has peaked. The projected YoY headline inflation is expected at 8.2% just below April which was 8.3%.
Analysts believe if CPI comes in at or near-consensus, traders could feel better. Headline inflation, including food and energy, was running at 8.5% in March, and the hope is that CPI will ease from here to half that level by year-end. The hike in gas prices in May is also expected to affect the CPI report Other factors include used car prices and food costs.
With tomorrow’s CPI coming out, traders will be watching the reaction of certain assets like the S&P 500 which closed last Friday at 4,108 down 1.6% for the day and 1.2% for the week. It is projected that if the S&P 500 does not hold support at 4,073 and 4000 below that, it could drop back to its recent low of 3,810.
Tomorrow’s US inflation data may also fail to cool Fed rate hike bets even if a weaker-than-expected print crosses the wires, which would help support the USD. General sentiment across the board suggests the USD may be primed to resume rising
Tomorrow’s CPI will be released by 1:30 pm. Will it be the next big catalyst for stocks?