Global macro overview for 12/04/2018

Inflationary pressure is mounting in the United States. In March, the CPI index increased to 2.4% y/y from 2.2% y/y one month earlier (in line with the forecast). The base indicator jumped to 2.1% (the highest level for a year). In February it was 1.7%. This is the largest monthly acceleration in this size since January 2011. Similar historical episodes predicted the continuation of the upward trend in inflation in the US in the coming quarters, also on the indicator based on consumption expenditure (PCE). The economists expect PCE inflation to accelerate to 2.0% in March and it should be maintained above this barrier until the end of the year. In the summer, this level will probably also reach the PCE index in the baseline. This supports the scenario of maintaining the central bank's hawkish attitude towards monetary policy with the possibility of holding a total of 4 interest rate increases (25 basis points each) this year. This was also the tone of the report from the Federal Reserve March meeting published yesterday.

Let's now take a look at the SP500 technical picture at the H4 time frame. The market is still consolidating in a tight zone between the levels of 266.81 - 262.70 in overbought market conditions. The gap between the levels of 268.89 - 270.30 hasn't been filled yet as well, which might be a problem for the bulls as the momentum is hovering around its fifty level, indicating a rather neutral market conditions. The key technical support and a major level to the downside is still seen at the level of 252.93.


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