Joshua Mahony MSTA
Scope Markets
- Abundant data drives muddled markets
- Inflation up and growth down as US data diverges
- Mixed expectations for June FOMC meeting
Today has seen fundamentals take centre stage as a plethora of economic and corporate data combined with three central bank statements to produce a somewhat cloudy economic picture for traders. It is unsurprising that most central banks remain within a ‘wait and see’ mode given the relatively recent fears of a crude fuelled stock market crash. Interestingly, crude prices fared remarkably better than many of the other risk assets today, with WTI weathering the heavy stock market sell-off this morning.
Following on from yesterday’s relatively positive FOMC statement, today has provided something for both bulls and bears alike today, with US inflation rising in the face of deteriorating growth. The fact that we saw the Fed’s preferred measure of inflation (core PCE) unexpectedly spiked to 2.1% in Q1, will certainly heighten expectations that the Fed could act in June. However, with US growth now predicted to amount to just 0.5% on an annualised basis, it is clear that the notion that domestic consumption can drag the US forward is increasingly unrealistic.
With the US presidential election set for November, Janet Yellen will know that her window to act is relatively small. It is clear that not all of Janet Yellen’s ducks will be in a row come June and as such she may have to prioritise what is more important to her; growth, inflation or normalising monetary policy.
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