Market Review: Investors Revel As Stock Prices Soar On Exciting Inflation Data

Must Read

US stocks surged on Friday as investors evaluated data revealing that inflation is waning while Federal Reserve rate hikes appear successful.

The S&P 500 and Nasdaq 100 indices have declined for the third consecutive week- their most prolonged slump since late September. This can be attributed to investors’ concern over a hawkish Fed, plus data suggesting that although further rate hikes may cause pain, the economy is robust enough to take it in stride.

This week, Treasuries closed the shortened session lower, with the benchmark 10-year yield rising to 3.75%, its most significant surge since April. USD experienced a weekly decline as the JPY strengthened to its peak in June following the Bank of Japan’s decision to expand its yield trading band, which is expected to draw Japanese investors back into domestic markets.

On Friday, data revealed that the Fed’s significant measure of inflation had slowed, and consumer spending was not increasing. A survey from the University of Michigan showed consumers’ year-ahead inflation expectations dipping to June 2021—the lowest in months. 

This information eased worries on Friday for investors and analysts alike. “I think there is very little depth of liquidity and many daily and weekly options. But it has seemed like really exaggerated moves relative to any news,” said Peter Tchir, head of macro strategy at Academy Securities.

Despite central bank officials’ frequent statements indicating their intent to raise rates, markets have mostly overlooked these warnings. Investors remain vigilant due to economic data released as of late, particularly concerning jobs, since any sign of a downturn in labour can be a red flag for the Fed.

“Historically, usually the market has been right, but in 2022 it’s been the Fed. Will we get the pivot in 2023, or will we get the pivot in 2024? If the market doesn’t get the pivot it expects, there will be some room for disappointment.” Jim Bianco, the founder of Bianco Research, said.

Investment markets have been delighted by the deceleration of inflation over recent months. Despite evidence that points to a strong economy, investors remain torn; this data reassure some as it bolsters their belief in avoiding an economic downturn, while others worry that the Fed will maintain its aggressive tactics. This uncertainty has seen market volatility increase significantly.

- Advertisement -spot_img
Latest News
- Advertisement -spot_img

More Articles Like This

- Advertisement -spot_img