The stock market’s start-of-year rally is poised to fizzle if a highly-anticipated U.S. inflation report on Tuesday dashes hopes for a quicker retreat in the cost of living in America, warned market analysts.
The Federal Reserve Bank of Cleveland’s Inflation Nowcast is predicting a hotter-than-consensus CPI report. As of Monday, the Cleveland Fed’s model shows headline CPI to rise 0.65% month over month, or 6.5% on a yearly basis. For core CPI, the tracker estimates an 0.46% monthly increase and a 5.6% year over year advance.
A hotter-than-expected inflation reading on Tuesday could mark a turning point in the equity market’s expectations for inflation and interest rates, with “far-reaching implications,” said Michael J. Kramer, founder of Mott Capital Management. “If CPI does come in hotter than expected, the equity market may find itself on the wrong side of the trend again, just as it has several times over the past 12 months.”Adding to potential volatility is the new weightings for the CPI calculation by the Bureau of Labor Statistics released Friday.
But what if corporations continue stock buy backs?
Why so
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