As Inflation Data Hits , the Sell-Off Could Make a Comeback by Wednesday


As Inflation Data Hits , the Sell-Off Could Make a Comeback by Wednesday

A trader said that the market could face another sell-off as early as Wednesday. He said that there could be another sell-off if the consumer prices in the U.S grow at better than expected speed.

The market traders and anticipated are cautious way before Wednesday’s release of consumer prices data in the U.S.

The S&P 500 was down more than 10% after the correction last week the investors are being very cautious and have taken quite a careful approach. They are wondering whether this could be a turning point for the markets that has hit a lot of new highs of the past year.

The head of trading at Amplify Trading, Piers Curran said that a lot depends on the release of consumer prices data in the U.S on Wednesday.  He also said that we have a got a really important event coming up on this Wednesday at 1:30 pm UK time which is 8:30 am ET. With the CPI data of US being announced this week, this is an important inflation measurement.

He also added that if the prices come in at 1.9 or 2% above, that is going to trigger a whole new episode of volatility all of witnessed in the last week.

Over the last 12 months, the U.S. consumer price index has been usually at 1.7%. If the prices increase suddenly, they are going to confirm the concerns that inflation is going moving at a much faster pace expected by the market and as a result of this the U.S Federal Reserve is probably going to announced more increase in their interest rates.

The increasing higher interest rates are quite a concern for the equity markets. Curran said that if the data on Wednesday is somewhat like 1.7 and 1.8% then things will settle down.  It is too early to say if this correction to become something bigger.

He also said that in 2018, there is no probability of recession but it is quite likely that recession is going to occur next year in 2019.