Investors turn their attention to the US Consumer Price Index, specifically after January’s employment figure struck doubt in traders’ minds. More or less, all investors had expected the Federal Reserve to increase the Federal Fund Rate by another 0.25% before confirming no more hikes for the foreseeable future. However, the latest Non-Farm Payroll figure and Unemployment Rate illustrate the imbalance in the employment sector and the risks of inflation again rising.
The US Dollar and US Indices have slightly declined ahead of this morning’s European Session. However, the price movement will all depend on the latest inflation figures. Most economists believe the CPI figure will read 0.5%, which would be the highest since July 2022. However, even with the higher CPI figure, the yearly inflation rate is expected to decline to 6.2%. The Core Consumer Price Index, which illustrates the inflation rate excluding food and fuel, is also expected to increase slightly to 0.4%.
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Investors will be evaluating three factors. First, how much will the Federal Reserve hike interest rates? Second, will the Fed keep hiking interest rates for more than 1 month, third, how long will the central bank keep rates this high? Hawkish comments can significantly pressure the US stock market again.
Many economists have advised that the CPI figure would need to come in at 0.4%, the highest, to experience another solid bullish run for the stock market. However, investors should note it is vital to monitor the price reaction to ensure being appropriately positioned.
