This week the CPI and PPI data showed inflation is still a concern with those numbers coming in higher than expected on a month over month basis. Some Fed officials mentioned that they still feel more aggressive hikes are needed to cool the continued rise in prices with the labor market remaining very strong.
The DOW and the SPY indexes finished down just slightly on the week while the riskier indexes the QQQ and particularly the IWM managed to put in reasonable gains at 0.5 and 1.5% respectively.
Interest rates on the 2- and 10-year treasuries headed higher again on Friday as the bond market is continuing to price in more rate hikes by the Fed. The levels pulled back after hitting prior highs at resistance but watch for these levels to break out with US dollar continued strength as well.
Next week we get the PCE price index data which is a favorite inflation indicator for the Fed. That may well also come in higher than expected which may pressure the Fed to get more aggressive on rate hikes.
Volatility remains low but the options market watchers saw some traders placing some very big bets that volatility will increase significantly by summer. Higher volatility will mean a market sell off has occurred.
In summary, we are chopping in a trading range now. I am raising cash and waiting to see which way we go from here.
What to Watch for this Week:
Sectors in Play Last Week:
Earnings this week:
Brian (Randy) Pezim is a Canadian trader and investor, with a focus on swing trading equities as well as day trading.