The Fed must respond to three straight month jump in inflation [Video]

Ipek Ozkardeskaya Swissquote Bank Ltd

Mood among investors is not cheery into the Federal Reserve’s (Fed) latest monetary policy decision due later today. And it’s understandable. The Fed must respond to three straight month jump in inflation and probably take a step back in its plans to cut the interest rates this year.

If the first few months of the year ended in tears for the Fed doves, the AI-related stocks lived up to very high expectations in the Q1. All the Maginficent 7 stocks that reported earnings so far – except from Tesla – surpassed high market expectations. Amazon posted the best beat among them, but the stock price rose less than 2% in the afterhours trading as a weak sales forecast for the current quarter tempered optimism regarding the Q1 results.

Elsewhere, Eurozone grew at the fastest pace in 18 months and exited recession in the Q1. But the EURUSD slipped to 1.0650 on broadly stronger USD, and risks are tilted to the downside at today’s FOMC announcement.

In energy, US crude cleared the 50-DMA and slipped below the $82pb level after the latest AI report posted an almost 5-mio-barrel build in US oil inventories last week and copper futures fell sharply as Fed hawk threaten the reflation trade.

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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