Our Urgent Market Update reviews important real-time market developments and their impact on high-probability trading opportunities. Today, we look at whether sticky inflation is a problem for market bulls.
The general basis for this analysis is based on Jerome Powell’s FOMC statement from two weeks ago. This statement gave a green light to market bulls to carry on with their relentless buying. This, mixed with sticky or increasing CPI numbers along with low employment, is a recipe for disaster in market bulls.
Market fundamentals suggest the following risk-off trades are at play:
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- Dollar higher
- US Indices lower
- Bond Yields higher
- Commodities lower
These trades are more likely to start playing themselves out in the coming days and weeks, however, the bigger question now becomes when these moves will occur. It is also worth noting the old trading proverb that these markets can remain illogical for far longer than you and I can remain solvent.
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