S&P 500 neutral

Data on US inflation

10 august 2021 147
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The July value of the US consumer price index (CPI) will be released on Wednesday, August 11th.

It is a key indicator for measuring the inflation rate in the US, and this exact indicator has been drawing extra attention over the past several months. This is because growth in inflation estimates points towards soon tightening of monetary policy on the side of the Fed.

The June value of the index was 0.9%, and the forecast for July is 0.4%.

It is possible to model the likely reaction of the market depending on the possible margins of the index:

-If the actual value is 0.5%, then it’s likely to lead to growth of the stock market and depreciation of the US Dollar.

-If the value falls within 0.5% and 0.7%, then it is likely that the market will react almost neutrally.

-And if the announced CPI is above 0.7 (and, as an extreme, above 0.9%), then the stock market will plummet, and the Dollar will rapidly start to appreciate. 

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