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This is dovish on the margin:one-year expected inflation to 3.2% vs 3.4% priorThree year inflation unchanged at 3.0%Five year inflation unchanged at 5.0%Households’ labor market outlook was mostly negativePerception of current financial situation worsenedExpectation of future financial situation declinedThe market remains in a poor mood with the S&P 500 down 1.0%
This article was written by Adam Button at investinglive.com.
💡 DMK Insight
Inflation expectations are cooling slightly, but the broader market sentiment is still grim. The drop in one-year expected inflation from 3.4% to 3.2% might seem like a win, but with three- and five-year expectations holding steady, it signals that traders are still bracing for persistent inflation. This dovish shift could influence the Fed’s next moves, but the negative labor market outlook and worsening perceptions of financial situations are weighing heavily on investor sentiment. With the S&P 500 already down, this could trigger further selling pressure, especially among retail traders who might panic in a bearish environment. Watch for key support levels in the S&P 500; if it breaks below recent lows, we could see a cascade effect across equities and correlated assets like commodities. Here’s the thing: while the inflation data might suggest a slowing pace of price increases, the underlying economic sentiment is shaky. Traders should keep an eye on upcoming economic indicators and Fed communications for clues on interest rate adjustments. The immediate focus should be on the S&P 500’s performance; a breach of significant support could lead to a deeper correction.
📮 Takeaway
Monitor the S&P 500 closely; a break below recent support could trigger further declines in the market.
