Fed's Favorite Inflation Data Due Friday: How Could Markets React To Surprises?
Portfolio Pulse from Piero Cingari
The upcoming release of the Personal Consumption Expenditure (PCE) price index report, a key inflation gauge for the Fed, is expected to significantly impact markets. Economists predict steady year-on-year and monthly increases for both headline and core PCE indices. A stronger-than-expected report could push bond yields higher and negatively affect interest-rate-sensitive sectors, while a downside surprise might revive the possibility of a rate cut, potentially leading to a stock market rally.
May 30, 2024 | 7:09 pm
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NEGATIVE IMPACT
The iShares 20+ Year Treasury Bond ETF (TLT) could see downward pressure if the PCE report indicates stronger-than-expected inflation, leading to higher bond yields.
Higher-than-expected PCE readings would support the scenario of higher-for-longer interest rates, likely pushing bond yields higher and negatively impacting TLT.
CONFIDENCE 90
IMPORTANCE 90
RELEVANCE 80
POSITIVE IMPACT
Amazon.com Inc. (AMZN) could benefit from a stock market rally if the PCE report shows a downside surprise, reviving rate cut hopes.
A downside surprise in the PCE report could lead to a relief rally in the stock market, benefiting major tech stocks like AMZN.
CONFIDENCE 80
IMPORTANCE 70
RELEVANCE 60
POSITIVE IMPACT
Alphabet Inc. (GOOGL) could benefit from a relief rally in the stock market if the PCE report shows a downside surprise, reviving rate cut hopes.
A downside surprise in the PCE report could lead to a relief rally in the stock market, benefiting major tech stocks like GOOGL.
CONFIDENCE 80
IMPORTANCE 70
RELEVANCE 60
POSITIVE IMPACT
Nvidia Corp. (NVDA) could see positive movement if the PCE report shows a downside surprise, leading to a stock market rally.
A downside surprise in the PCE report could lead to a relief rally in the stock market, benefiting major tech stocks like NVDA.
CONFIDENCE 80
IMPORTANCE 70
RELEVANCE 60
POSITIVE IMPACT
The SPDR S&P 500 ETF Trust (SPY) could experience a relief rally if the PCE report shows a downside surprise, reviving the possibility of a rate cut.
A downside surprise in the PCE report could ease concerns about rising price pressures, potentially leading to a relief rally in stocks as Treasury yields decline.
CONFIDENCE 85
IMPORTANCE 80
RELEVANCE 70