Soft US CPI boosts reflation trade, hit US tech stocks [Video]

Ipek Ozkardeskaya Swissquote Bank Ltd

The softer-than-expected US CPI data sent the US yields and the dollar tumbling, and most majors rallying against the greenback. The USDJPY particularly attracted attention as traders tried to understand whether the move was natural, or it was somehow exacerbated by a Bank of Japan (BoJ) intervention.

In equities, the S&P500 and Nasdaq fell sharply yesterday after the US CPI data. The sharp rise in Fed rate cut bets and falling yields looked like they didn’t give support to the major US indices, but they did. The S&P500’s equal weight index jumped 1.20%. The flight from Big Technology to other sectors, the reflation trade, was big like a mountain at yesterday’s trading session. But it also came as a proof that, no matter how hard the other sectors rally, if the bleeding in Big Tech stocks is not contained, the major indices will suffer.

Today, attention shifts to earnings. The Us big banks will open the dance today.

Author

Ipek Ozkardeskaya

Swissquote Bank Ltd

Ipek Ozkardeskaya began her financial career in 2010 in the structured products desk of the Swiss Banque Cantonale Vaudoise. She worked in HSBC Private Bank in Geneva in relation to high and ultra-high-net-worth clients.

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