Wall Street Trading Week Preview: Consumer Price Index Data for April Expected to Increase by 0.4%

•  trendspotteam

•  May 07 2023
 

The trading week on Wall Street will open tomorrow with the consumer price index data for the month of April that will be published on Wednesday. Wall Street predicts that there will be an increase of 0.4% in July, but on an annual basis the figure will not change and will continue to indicate 5%.

Inflation is very sticky and now stands at 5% after adding 0.1% in March. This is indeed a decrease from a record of 9.1%, but the road to the 2% target set by the central bank is still very long. This is a rather optimistic figure but not impossible. It should be remembered that as the number decreases every month, the decrease becomes more difficult, and if the number does meet expectations, it is not impossible that we will see the indices on Wall Street painted green for a few days.

But above all there is still a cloud in the shadow of the harsh warnings of senior economists against a recession already in the near term. The Fed has already made sure to emphasize how many times it will do everything it can to fight inflation and suppress it even at the cost of entering a recession. In his words, he clarifies that inflation is more dangerous than recession because it can destroy the economy and over time even cause irreversible damage.

The season of Wall Street reports is already nearing its end. This week we are expected to see a number of companies, the most prominent of which will be Air BNB, Disney, PayPal, Occidental, Rivian, Palantir and more. It is still difficult to summarize the report season, but overall it seems that it was not particularly bad and the big question is how they will cope in the current quarter and what we expect to see in the next report.

In April, 253,000 employed were added (above the expected 180,000), but the data for February and March were revised downwards by 149,000 employed. Looking at the average of the last three months, this is an increase of 295 thousand employed per month on average, a definitely positive figure.

All the data support a moderation in activity while there is a shortage of workers and wage pressures. The front of the tight labor market and the increase in wages should be of great concern to the Fed. It will be important to see the April inflation data that will be published on Wednesday. The Fed said the next decisions will be data dependent). Without a very moderating effect due to the banking crisis and credit crunch, another interest rate increase by the Fed cannot be ruled out. It is certainly difficult to expect a rapid drop in interest rates.

Inflation is still high, but it has been on a clear downward trend for several months and the members of the Fed know that it will take several more months for the interest rate increases that have already been made to give their signals in the economy and especially in the labor market. Accordingly, the Fed expects that in the second half of the year the labor market will begin to slow down and the rate of annual wage growth will decrease to a level of approximately 3%. Such a level is correlated with inflation of 2% over time and that's where the Fed is rowing.

Please note that the article should not be considered as investment advice or marketing, and it does not take into account the personal data and requirements of any individual. It is not a substitute for the reader's own judgment, and it should not be considered as advice or recommendation for buying or selling any securities or financial products.

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