March CPI and Bank Earnings Could Signify a Tough Week Ahead

you.S. markets only have a four-day week next week before a holiday weekend, and with major players in the financial sector including JPMorgan, BlackRock and Goldman Sachs set to report earnings and expectations for the consumer price index for March ahead, it could be volatile for several days.

The March CPI is expected to top 7.9%, CNBC reported, and FactSet predicted a decline for the financial sector of $24.2 year-over-year. The combination of the two and the generally heightened volatility seen during earnings season could send markets into another tailspin.

The outlook and performance of the financial sector will be closely watched, as banks traditionally benefit from a rising rate environment, up to a point. With the Fed’s recent interest rate hike and potentially more aggressive rate hikes on the horizon, as well as planned bond phasing as the Fed shrinks its balance sheets, analysts want to see how big banks see the current outlook for businesses and customers.

The March CPI release is highly anticipated for a number of reasons, including how it will set expectations for the Fed’s interest rate hike in May.

“This is big. This is the last key data point before the Fed meeting on May 3,” explained Michael Schumacher, head of macro strategy at Wells Fargo Securities.

Barclays economists estimate that the CPI will have gained another 1.24% in March to reach 8.5% year-on-year, the highest it would have been in more than 40 years, but with the expectations that this is the peak and that inflation will start to decline. after.

“I suspect at the end of next week, with the long weekend coming up, people will want to take the risk off, but I suspect it could be quite a tough ride with CPI before we see that,” said Schumacher.

Managed Futures Delivers Strong Macro Volatility Performance

the KFA Mount Lucas Index Strategy ETF (KMLM) from KFAFunds, a KraneShares company, offers investments with managed futures contracts.

KMLM’s benchmark is the KFA MLM Index, and the fund invests in commodity currencies as well as global fixed income futures. The underlying index uses a trend-following methodology and is a modified version of the MLM Index, which measures a portfolio containing global currency, commodity and fixed income futures.

The index and KMLM provide possible hedges for equity, bond and commodity risk and have demonstrated negative correlation with stocks and bonds in both bull and bear markets. Investing in managed futures offers portfolio diversification, and keeping them in a portfolio can potentially help mitigate losses during market volatility and falling prices.

The index weights the three different types of futures contracts based on their relative historical volatility, and within each type of futures contract, the underlying markets are weighted equally in dollars. Futures contracts will be rolled over on a market-by-market basis as they near expiry.

The index futures include 11 commodities, six currencies and five global bond markets.

The index assesses market trading signals daily, rebalances on the first day of every month, invests in securities with maturities up to 12 months, and plans to invest in ETFs to gain exposure to securities. of debt.

KMLM has an expense ratio of 0.90%.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


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