Focus on US CPI!

00:00:00: Hi and welcome to Swisscodes, daily market talk.

00:00:03: It's Wednesday the tenth of June.

00:00:05: In a few hours from now The US will release status inflation data where headline inflation may have spiked above the full percent mark Across financial markets nerves are fragile.

00:00:18: the data will land at time.

00:00:19: Middle East tensions re-escalate Technology appetite is questioned And technology space preparing for the SpaceX IPO that could drain liquidity.

00:00:29: Either way, today's USCPI report could determine whether the recent weakness in technology turns into a broader correction or a broadening of the relative non-technology sector.

00:00:40: so we will talk about all that and more.

00:00:43: but before we do as always please keep in mind that opinions are my own.

00:00:49: this is not financial advice.

00:00:57: So the

00:00:59: ceasefire, not that I would call it that but flew out of the window yesterday after Iran reportedly downed a US helicopter triggering fresh US attacks on Iran.

00:01:11: Israel never really seized fire in Lebanon.

00:01:14: So the Middle East headlines are uglier this morning than they have been for weeks.

00:01:18: As a result, crude oil rebounded from yesterday's USD per barrel dip but to my surprise holds below the USD level this morning.

00:01:29: despite rising tensions in the middle east either investors continue to price end and off the Iranian war regardless of their latest developments or don't care anymore about of hormones remains closed, raises the odds for a bigger oil price surge later on.

00:01:57: Positive at the time I'm talking here this morning.

00:02:00: We are just before The European market open.

00:02:03: US futures.

00:02:04: on other hand our pointing lower This morning following a volatile session in the u.s Where technology sucks lead major indices lower AMD and micro for example, we're down by more than ten percent At some point in the session Before recovering part of their losses while the nasa hundred that's more then four percent at some point yesterday and close the session more than one percent down.

00:02:28: Technology, which has shouldered the market value so far since the Iranian war started is now giving signs of exhaustion.

00:02:36: So overall, market investors' nerves look for a gel this morning heading into today's next big data test The US CPI update and hopes an urge to chase the dips could evaporate in the blink of an eye.

00:02:48: Because what?

00:02:49: Last time the U S released major batch of economic data That was last Friday's US jobs data, I remember.

00:02:56: Markets descended into mayhem literally.

00:02:59: Bonneville spiked after a set of stronger than expected payrolls and despite its softish wages growth and latter sent Nasdaq more than four percent down remember almost five percent actually until well the inflation has gained all his importance back since the Middle East war send energy prices significantly Higher, and since the US jobs market appears sufficiently strong today to encourage the Fed.

00:03:25: look where it's more say uncomfortable meaning inflation.

00:03:29: And in the particular case of the United States, gasoline prices rose by more than one hundred and twenty percent at May peak.

00:03:36: And remain around eighty percent higher today compared to levels that we saw this year.

00:03:43: Unsurprisingly inflation data reacted immediately to rising oil prices.

00:03:48: Headline CPI data in the West spike to three point three percent a few weeks after the war started then advanced to three-point eight percent level In April.

00:03:56: We are talking about Year on Year figures and the figure is seeing crossing a full-person mark in today's main print.

00:04:03: Core inflation on the other hand, which strips out volatile food at energy prices – more important for those who are trying to guess what the Fed will do next may have risen toward.

00:04:19: So what's important today is that both inflation metrics, both headline and core inflation are significantly higher than the Federal Reserve's two percent policy target.

00:04:29: As such, rising inflationary pressures have totally shattered expectation of a federal reserve rate cut later this year on the funds.

00:04:37: futures now priced in the possibility off a Fed hike as soon as this October at a coin flip.

00:04:44: And even the new chair, Mr.

00:04:45: Kevin Walsh who is inclined to cut interest rates and reduce the size of the Fed's balance sheet will not be able to cut the interest rate when inflation spikes past a four percent mark!

00:04:58: On a side note I don't think that he'll be able not possible without causing a massive sell-off when the global financial markets have been enjoying and building on ample and parabolic liquidity injections since.

00:05:19: But anyway, without taking his defense initially Warsh argued that technology advances and AI would be disinflationary.

00:05:27: And even deflationary because they will increase productivity boost supply has full prices lower in a way to pay the way for structurally lower rates.

00:05:36: now that thinking sure holds in the longer run but In the shorter one we have problem.

00:05:40: Houston The Middle East wall brought it completely unexpected flavor into the mix which is a spike in energy prices.

00:05:48: And you know what a prolonged period of higher energy prices mean, it means inflation.

00:05:53: Also the massive AI build out today is accessorily pushing electricity and other raw material costs higher as well.

00:06:00: So to this CPI data from the US will be important and close the watch.

00:06:04: obviously It's Will Be The Last Important Data Point Before Kevin Warsh Goes Into His First FIMC Meeting As A New Fat Chair.

00:06:14: As per the market reaction, a set of stronger than expected figures today could eventually echo similarly to what we saw last Friday posterior-to-the US jobs data release sending bond yields higher and stock prices lower.

00:06:28: And note that the market moves could be as sharp depending on the data.

00:06:32: but the market is so crowded with bullish positions that even small fear can turn into nightmare!

00:06:40: Figures in line are ideally softer than expected.

00:06:43: On the other hand, could help avoid another resell off like the one we saw on Friday but will hardly reassure those who watch the news beyond technology and AI regarding what's to come.

00:06:53: And even for AI and technology investors.

00:06:56: rising yields Could be difficult to ignore when the technology appetite is being questioned today due sky high valuations and a parabolic rise in market prices over the past few months.

00:07:09: In reality, only at the end of the Middle East war reopening off the strait of homeless with establishment of trade flows on or is sustainable pullback in global energy prices would mark to end up the actual inflationary wave and push back The Federal Reserve and other central bank hogs out.

00:07:28: give a support to the financial markets leading the way for broadening of recent technology rally that would also soften potential pullback in technology stock prices.

00:07:38: So fingers crossed four days US CPI update, and the currency market is derising oil prices and hawkish shift federal reserve expectations all through a floor under greenbacks.

00:07:49: year long depreciation between two thousand twenty five to two thousand Twenty six against most majors however relatively dovish compared to other major central banks, and the broiler loss of appetite for US dollar and US treasuries due to geopolitical uncertainties actually kept upside attempts quite limited.

00:08:11: But forgetting about war for a second….

00:08:13: The U.S growth has been stronger than many major economies thanks to massive AI investment, massive AI build-out & government spending – and latter could maintain the dollarables in appetites when actual levels allow for further upside correction of the US dollar without necessarily reversing its longer term bearish trend.

00:08:34: Yes, some point in time when the Middle East does settle.

00:08:37: The rate differential between the Fed and the rest will likely weigh on U.S.

00:08:42: dollar appetite and give support to G-Seven Peas!

00:08:45: The million dollars question is... When Will The Dust Settle In The Middle East?

00:08:49: So this all for today.

00:08:50: I'm Ipeko Skardeshkaya And thank you for joining me.

00:08:53: Thank You For All Your Beautiful And Supportive Comments.

00:08:57: I hope This episode of Market Talk has been helpful and it's insightful to you so please do not hesitate to leave your comments, reactions below as usual.

00:09:10: Follow us on Instagram, on X on LinkedIn but also on WhatsApp, Threads, Telegram & Blue Sky for regular market updates.

00:09:18: Subscribe our YouTube channel daily!

00:09:21: market commands and please, don't forget to hit the like button on these videos so let us know that you enjoy them.

00:09:29: So I will meet again tomorrow and until then good day

00:09:49: trading!