What will happen in the coming days?
Week of Important Announcements
On May 11, auctions of 3‑month Treasury bills and 6‑month Treasury bills in the USA will take place. High demand for this type of asset will indicate that capital is flowing out of risky assets and moving toward safe havens.
More important data will be released on May 13. The U.S. CPI for April will be published. The month‑over‑month forecast assumes an increase of 0.6% (previously: 0.9%). The year‑over‑year rate should, according to experts, jump by 3.7% (previously 3.3%). The core CPI month‑over‑month may rise by 0.3% (previously 0.2%).
If inflation rises, it will further reduce the chances of rate cuts by the Fed. Even hikes cannot be ruled out. Today, according to the FED Watch tool, the scenario with cuts is priced at 0%.
As the data show, Americans have never been more worried about the state of the economy. The consumer sentiment index fell in May by 1.7 points, to 48.2. This is a record low. The decline occurred while current conditions worsened by 4.7 points, to 47.8, also a record low.
It’s not just objective data. The so‑called perceived financial situation among Americans fell to the lowest level since 2009. As a result, the Consumer Sentiment Index is now below the minima from the 2008 financial crisis. For context, during the 1980s recession the index hit a low of about 52.0 points. Consumer sentiment is therefore at a crisis level.
Read also: Donald Trump threatens Europe – wants to hit the automotive market. What’s the U.S. president playing for?
Geopolitics Rules and Will Continue to Rule?
Investors should also pay attention to what is happening in the world of great politics. Currently, a three‑day ceasefire (May 9‑11) is in place on the Ukrainian front. This is an initiative of Donald Trump, who stated that “the suspension of hostilities will include a halt to all combat operations, as well as the exchange of a thousand prisoners from each country.”
“I greatly appreciate the agreement of President Vladimir Putin and President Volodymyr Zelenskyy. I hope this is the beginning of the end of a very long, bloody, and determined war. Discussions are underway to end this serious conflict, the biggest since World War II, and each day we are getting closer to its resolution,” the U.S. president said.
Trump has fewer successes in the Middle East. Although a ceasefire still applies there, more facts suggest it is formal, as there has recently been a fire exchange between the parties.
Further turmoil will mean a potential jump in oil prices, which could translate into declines on the traditional stock exchange.
Now Iran has taken full control of all seven undersea internet cables crossing the Strait of Hormuz. Under Tehran’s new policy, “foreign operators” must obtain permits to use these cables. This includes paying fees and complying with Iranian law. The entire management and maintenance of the cable system will be handled by Iranian companies.
In the background, Trump threatens to start a new trade war with the EU. He said he could raise tariffs that would hit the EU automotive market.
See also: Intel shares up 114%, Alphabet (Google) nearly 34%. We finish a record month on the exchange, with U.S. congressmen helping bulls.
Source: X/Kobeissi Letter
