US Stock Trade Higher, Inflation Stubbornly Persists as Markets Await Central Bank Clues and Trump’s Tweets

US  stock futures are trading modestly higher as investors continue to digest the impact of the latest economic data while keeping a close eye on Trump tweets. After the fresh US CPI reading that came out yesterday, traders know that the Fed’s battle with inflation is still not a walk in the park, as the latest reading did move to the upside but is still in line with expectations. This is a trend that we have seen not only in the US but also in Europe, the UK, and Australia. Basically, this confirms two things for market players: firstly, that the central banks are quite right in adopting a modest approach in terms of lowering the interest rates. Secondly, any optimism about inflation being tamed needs to be considered with a pinch of salt.

Despite the fresh reading on the US CPI, the expectations are that the Fed will fire one more time from its gun in December in terms of lowering the interest rates, which many do believe is the right approach. However, the uncertainty park of the equation comes from the President-elect, Donald Trump, who could very well put a lot of pressure on the Fed by asking them to do something that they may not be comfortable with, and that is to lower the rates more aggressively.

In terms of the US stock indices, the S&P 500 gained 0.02% yesterday, the Nasdaq Composite fell 0.26%, and the Dow Jones Average went up by  47 points, or 0.11%. The below chart shows important price levels for the US 100.

US 100 chart by XTB  

Economic Docket

In terms of economic numbers, there is no shortage of firefighters. We have the US Core PPI and unemployment claims number, and these will be followed by the comments of three central bankers, the Fed, the ECB, and the BOE. So the later part of the trading session is likely to experience higher volatility. Having said this, smart knows that there is nothing that these central banks will reveal that they already do not know. Basically, it will be the same narrative, which is that their fight with inflation has been tough and there is still a lot more work to be done, and any step that they take needs to be extremely careful as there is literally no room for another policy mistake such as calling inflation transitory.

In terms of US data, the US unemployment claims are expected to come in at 224K, while the previous number was at 221K—there is not a lot of difference in terms of what was the last number and what is expected from the market. In addition to this, we do have the US crude oil inventories data, which is expected to show the reading of 0.4M against the previous reading of 2.1M.

Bitcoin and Cryptos

The price action for the crypto king does show that traders are still very much in the mood of pushing the prices higher; however, they are catching their breadth as the recent moves have been too fast. But here is a thing: when it comes to cryptos, there is no such thing as fast, and especially the fact that the bitcoin price is not 90K, so another 10K price move doesn’t really mean that much, as the crypto king is very capable of making such moves, and it did when the price for one bitcoin was much smaller than what it is now.

Traders are also keeping a close eye on altcoins, as for many retail traders they represent a much better risk-to-reward ratio, and this is because not many can actually afford to buy one bitcoin, and even if they do, it is not going to double their money that quickly. So for them, the only option is to go after Altcoins and look for a higher multiplier and risk more—after all, all Altcoins are nothing more than speculations with little to no fundamentals behind them.