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Equity markets cool before inflation data

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The stock market had a blue day. Traders are anxiously waiting for the latest development on the economic and political front. Major indices fell as traders continued to pare down their positions. This comes after a rally in early April as investors continued to expect the Fed to possibly reduce interest rates despite attempts by Uncle Powell to water down such expectations.

The market seems to have baked in most of the good news.

CPI day on the radar

Economists are now bracing for the CPI data to be released at 8.30 pm. We are looking for a CPI gain of 5% on a yearly basis, which is unchanged from March’s reading. If the reading shows continued sticky inflation, the Fed might not be able to pause its rate hike, and it could send stocks lower.

A political fight on the debt ceiling

Then, we have the debate on the debt ceiling. Republicans and Democrats can’t seem to agree on a consensus. While this is not surprising, as the clock ticks, it unnerves investors as Treasury will run out of cash to pay its bill sometime in early June.

As we have seen, the short-term one-month Treasury bill has fallen, and its yield rose slightly above 5.5%. While market participants are not expecting any meaningful progress soon, they aren’t as patient as before if the deadline looms closer to default.

Paypal- A fallen Titan despite decent earnings

It is one of the stocks that is pulling down our long-term portfolio. We had not cleaned up our past long-term portfolio (that comes with the memes), and this is one of the stocks that had given up almost 70% of its peak gain.

While most would agree that the earnings were decent, there is a concern about its margin. The profit margin had increased at a slower pace than expected. Indeed, PayPal is probably one of the largest losers in the S&P 500 component, and we continue to monitor our positions in this counter.

What’s on the menu today?

8.30 pm : Core CPI (MoM) , CPI (MoM)
10.30 pm : Crude Oil Inventories

It is 10 May, Wednesday, at 9.05 am in Singapore and 9.05 pm in New York. It has been a quiet trading session as we share the latest market development with you. We will shift gears to a new channel to keep the main channel as clean as possible.

We wish you a delightful morning.