Powell effect short-lived, markets weigh tariffs and inflation
The reassuring effect of J Powell’s words was short-lived in the financial markets, as fears about the negative impact of tariffs on the US economy reasserted themselves. It is now time to keep a closer eye on commodities and inflation indicators.
In our intermarket dashboards, while we continue to monitor the performance of the S&P500 and bonds, which are stuck in technically sensitive areas, we are also starting to look at the movement of commodities, an important asset for understanding the evolution of inflation in the coming months. The commodity T-30 ratio and the commodity trend are two good indicators. The former is moving around its 50-day average and shows a bullish trend from early autumn 2024 until today. The latter is trying to break out of a sideways trend and, after breaking above the 200-day average earlier this year, is now above the 50-day average. Could this be the beginning of a bullish phase? The crossing of the long and medium-term averages in early February should also be taken into account. These will be our focus in the coming weeks.
On the macroeconomic front, the day is light. Only the Japanese inflation data and the preliminary estimate of eurozone inflation expectations are worth mentioning.
Our forecast analysis points to another uncertain day, with few convincingly positive signs. On the bond front, there are positive signs for European corporate bonds, while US yields are expected to move slightly lower. The situation in commodities is also uncertain, with expectations for gold. There was little movement in volatility, while on the currency front, positions in the Swiss franc and pound sterling were also put on hold.
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NOTES AND WARNINGS
Data compiled by kbmeter.com. Analysis date: 21 March 2025 - 7:19 AM GMT+1
This content is provided for informational purposes only and should not be considered financial advice. All scores and assessments are based on the previous trading day’s closing prices. Futures indications refer to the date and time of the analysis.
