Equity markets continue to be wrapped into the story of potential rate cuts in the US. The optimism which pushed the S&P 500 toward the level of 5.222 for one more time, was halted on Friday by the much worse than expected Michigan Consumer Sentiment index preliminary for May. Based on these readings, economists are noting a switch in the consumer sentiment in terms of increased fears of inflation, unemployment and interest rates which are all moving in an unfavourable direction in the future period, based on the survey. Such negative expectations might impact contraction in consumer spending in a future period, with final impact on the economic output in the US.
However, investors are still holding on to the recent weaker jobs data, which is increasing a potential for Fed's rate cut if the trend continues, exposing some weaknesses in the US economy. April`s consumer price index data are set to be released in a week ahead, and might test currently ongoing market optimism.
However, investors are still holding on to the recent weaker jobs data, which is increasing a potential for Fed's rate cut if the trend continues, exposing some weaknesses in the US economy. April`s consumer price index data are set to be released in a week ahead, and might test currently ongoing market optimism.
