@missflo
Yesterday, we witnessed an unexpected market dump.
The sentiment was good, CT was euphoric, but it still happened.
What could have been the trigger?
Higher-Than-Expected PPI (Producer Price Index)
➜ What is PPI? It is an inflation measure that shows the average change in price for output by domestic producers.
➜ This signaled a minimized chance for an aggressive rate cut by the Federal Reserve, thanks to high inflation.
➜ The rate cut expectation shifted from 75 basic points to 25 basic points.
➜ Rate cut odds drive market sentiment.
➜ Rate cuts come with monetary easing.
➜ But the impact is low with lower rate cuts.
➜ This shifts the market sentiment as people become less optimistic.
➜ They introduce caution by de-risking.
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