The US Consumer Price Index excluding food and energy rose 0.2% month on month in March. The forecast was 0.3%.<\/p>\n
The outturn was 0.1 percentage points below expectations. This refers to the core CPI measure, which removes food and energy prices.<\/p>\n
The softer-than-expected core CPI reading of 0.2% for March is a significant dovish signal for us. This directly challenges the narrative that inflation is sticky and increases the likelihood of an earlier Federal Reserve rate cut. In response, market-implied probabilities for a June rate cut, as seen in Fed Funds futures, have jumped from around 40% to over 65% this morning.<\/p>\n
We should be looking at positioning for lower interest rates ahead. This involves buying derivatives tied to short-term rates, such as September SOFR futures, to lock in a lower future rate. The sharp drop in the 2-year Treasury yield by 15 basis points to 4.50% following the news strongly supports this trade.<\/p>\n
Lower rate expectations are a strong tailwind for equities, especially for growth and technology sectors. We should consider buying near-term call options on the Nasdaq 100 (NDX) to capitalize on a potential relief rally. With the VIX dropping below 14, selling put spreads on the S&P 500 offers a way to collect premium with a defined risk profile.<\/p>\n
A more dovish Fed typically weakens the U.S. dollar against other major currencies. We are positioning for this by looking at bullish options strategies on the EUR\/USD pair. This dollar weakness also provides support for commodities, making call options on gold futures an attractive hedge against any lingering uncertainty.<\/p>\n
This environment feels very similar to the market pivot we saw back in late 2023. At that time, a series of cooling inflation reports led the Fed to signal the end of its hiking cycle, sparking a powerful rally in stocks and bonds. We believe a similar repricing event is now underway.<\/p>\n
Create your live VT Markets account<\/a>\u00a0and\u00a0start trading<\/a>\u00a0now. <\/b><\/p>\n","protected":false},"excerpt":{"rendered":" US core CPI rose 0.2% in March, below 0.3% forecast, undershooting expectations by 0.1 points.<\/p>\n","protected":false},"author":38,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[46],"tags":[],"class_list":["post-44648","post","type-post","status-publish","format-standard","hentry","category-live-updates"],"acf":[],"aioseo_notices":[],"featured_image_src":null,"featured_image_src_square":null,"author_info":{"display_name":"josephine","author_link":"https:\/\/www.vtmarketsglobal.com\/en\/author\/josephine\/"},"_links":{"self":[{"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/posts\/44648","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/users\/38"}],"replies":[{"embeddable":true,"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/comments?post=44648"}],"version-history":[{"count":0,"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/posts\/44648\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/media?parent=44648"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/categories?post=44648"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/tags?post=44648"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}