How we're positioning for the inflation reports
Hey team.
With the market anticipating the key inflation report due tomorrow, we highlight all the important things we’ll be watching.
Let’s jump in!
Impact Snapshot
Powell reiterates Fed likely to keep rates higher for longer
Producer prices top forecasts
Tomorrow: CPI inflation, Retail Sales.
Market Evaluation
The S&P 500 traded just a few points away from its all-time high. Traders awaiting key inflation data for clues on the Federal Reserve’s next steps.
Leading up to the release of the consumer price index, recent data revealed that producer inflation exceeded expectations.
However, a closer look at the details provided some reassurance, as crucial categories influencing the Fed's preferred gauge showed more modest changes.
Tuesday brought a fresh round of discouraging inflation data, when the producer price index rose a higher-than-expected 0.5% in April.
Fed Chair Jerome Powell reiterated today that inflation is falling more slowly than expected, likely keeping interest rates elevated for an extended period.
How To Find "A+" Setups
Markets Breakdown
So many times we highlight the importance of paying attention to what the market is doing rather than being too focused on the economical report numbers.
Early this morning after the PPI inflation report came in higher-than-expected, market tanked in the overnight session.
A move that was later completely retraced back up towards the settle. The market didn’t spend any time below the 2-day balance and the selling activity was completely negated.
On our morning report we’ve posted prior to the US open here, we gave clear warnings to focus of what the market is doing than what the “economical report” came out to be.
Our view was seeing early chop as the market was digesting the inflation report and comments from the Powell’s speech and our main focus was building value above the pivot which later triggered our bullish scenario with continuation towards 5272 zone.
The session ended with a double distribution. Heading in tomorrow’s session, maintaining activity on the upper distribution is a sign of strength for continuation.
ES
Targets we’ll be looking at heading into the overnight:
Upside Levels: 5285/5296/5306
Downside Levels: 5249/5240/5223
That’s all we got!
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