JPMorgan’s Guide to Trading This Week’s CPI Report

Welcome to Extreme Investor Network, where we provide you with unique insights and valuable information to help you navigate the world of investing. This week, all eyes are on Thursday’s release of the June consumer price index report, a key market event that could impact the Federal Reserve’s decisions on interest rates.

Economists are predicting that the CPI will have risen 0.1% month over month in June, with a year-over-year increase of 3.1%. The core CPI, which excludes volatile food and energy prices, is expected to have expanded 0.2% month over month and 3.4% year over year. This report has the potential to create short-term volatility in the stock market, especially with equities currently at record highs.

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At JPMorgan, traders have broken down six possible scenarios and how they believe the S&P 500 will react to each one. With a 35% chance of the CPI rising 0.15% to 0.2% month over month, the S&P 500 could see a 0.5% to 1% increase, leading to calls for a September interest rate cut. On the other hand, a 15% chance of CPI rising 0.25% to -0.3% could result in a 0.75% to 1.25% drop in the S&P 500, as this scenario may show increasing shelter prices.

Additionally, there is a 2.5% chance of a more than 0.3% increase in CPI, which could trigger a 1.25% to 2.5% sell-off in the S&P 500. This scenario would likely shift the market towards a recessionary or stagflationary narrative. Conversely, a 2.5% chance of CPI rising less than 0.1% could drive a 1% to 1.75% surge in stocks, potentially pulling forward calls for a July interest rate cut.

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As an investor, it’s crucial to stay informed and be prepared for all potential outcomes. At Extreme Investor Network, we provide you with expert analysis and unique perspectives to help you make informed investment decisions. Stay tuned for more valuable insights and updates to help you navigate the complex world of investing.

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