Despite the back-to-back weekly gains of the S&P 500, there is still so much going on that volatility and wild price swings may linger. Not to be confused with the Fantastic Four movie franchise, the market seems to have its own fantastic four. That being growth, inflation, interest rates, and the Federal Reserve.
As of right now, growth is decelerating at a much quicker pace than inflation. Interest rates, globally, continue to move higher, and many investors expect the Federal Reserve to be aggressive in hiking interest rates. The result of all this is a market that seems irrational.
For the week ahead, the key economic data point revolves around inflation. Specifically, we’re talking about the consumer price index which gets released on Thursday. The more “sticky” inflation is, the more the Fed will have to hike interest rates to defeat it. So, let’s keep a close eye on inflation, not just for the week ahead, but really, for the months ahead.
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