The US April CPI is about to be released, and Morgan Stanley predicts that the Fed will delay the rate cut

Since January this year, as expectations of interest rate cuts have fermented, both the U.S. stock market and the cryptocurrency market have seen a sharp surge. However, with changes in the macro environment and geopolitical turmoil, the stock market and cryptocurrency market have seen a significant correction recently.

At the same time, the latest important macro data "US April CPI" will be released on May 15, but the market generally expects it to be much higher than the Fed's target value, that is, to maintain an annual growth rate of 2%.

According to the forecasting model, the monthly growth rate of US CPI in April may be 0.4%, while the monthly growth rate of core CPI may be 0.3%. Data from the forecasting platform Kalshi show that the annual growth rate of CPI in April may be between 3.3% and 3.4%, which is much higher than the Fed's target value.

With the expectation that inflation in the United States is "sticky" and may even intensify, the market has begun to postpone the Fed's expectations of rate cuts. Morgan Stanley, which originally predicted that the Fed would start cutting interest rates in July this year, changed its forecast in a report on Tuesday, believing that the Fed would not cut interest rates until September this year, and that there would be three consecutive rate cuts this year, each time by 1 basis point (25 basis points).

However, the latest data from the U.S. Department of Labor showed that non-farm employment increased by only 175,000 jobs in April, far below market expectations of 243,000 and the revised figure of 315,000 in March. The unemployment rate also rose slightly to 3.9% in April, which made the market seem more certain that the Federal Reserve should cut interest rates before the end of this year.

Should I sell or buy?

Based on historical data, there may be a rebound during the summer in presidential election years.

The S&P tends to rally in the summer, and can rebound sharply in election years.

Since 1928, June to August is the second strongest quarter in history, with a 65% chance that the S&P will rise during this period, with an average return of 3.2%. The US high-yield option-adjusted spread (OAS) is a leading indicator for US stocks, and the indicator showed a bullish signal yesterday, which is the key to supporting the S&P's rebound in the summer.

The market generally believes that the market will perform poorly between May and September every year, which is why there is the saying that there will be a comeback in six or seven months. Therefore, institutions recommend that investors liquidate their positions in May and then return to the market in November.

The "poor performance" mentioned above does not mean that the market will fall, but rather that prices will usually fall into a consolidation pattern, neither going up nor down. Therefore, investors are advised to liquidate their positions and wait and see to protect existing funds.

Historical data generally supports the argument for selling in May since 1945. The S&P has gained an average of 2% from May to October and 6.7% from November to December.

The sell-in-May argument doesn't always work, and it's not suitable for all investors. It ignores short-term events that drive market changes, and is therefore more suitable for long-term investors; certain industries may perform better than others in the summer, and if you take this adage and exit, you may miss out on profit opportunities.

For cryptocurrency investors, the importance of this year's US election may be far greater than in the past. Investors should carefully consider whether the strategy of selling coins in May is applicable to this year's market conditions.

Biden has always been against it, while Trump has always supported cryptocurrencies. If Trump is elected, it will bring a significant boost to the crypto market. If you sell it now, you may not be able to get back the price.

The cottage market did not follow the previous decline and show a waterfall-like cliff. This is actually a good phenomenon, indicating that the spot market has fallen almost enough. Maybe everyone has been trapped too much! The volatile market will continue. In the next two days, Saturday and Sunday, the market will continue to fluctuate. The spot cottage market is currently only suitable for short-term trading. If you eat 10-20%, you must leave. Now is not a good time for the situation. Of course, it doesn’t matter for long-term trading. Large positions are long-term, and part of the positions are used for short-term sniping by hot money.

Current market conditions

The US one-year inflation rate is expected to be 3.5% in May, the highest since November last year.

The range of 60000-63000 keeps fluctuating up and down, with the support of 60000 for Bitcoin and 2900 for Ethereum. There won’t be many opportunities for intraday market.

If the price of Bitcoin reaches 5.8, be bold to cover your position

For those who have lost GAS, you can enter again at 4.9, and set the stop loss at 4.75. For those who have not lost GAS, you can also move the stop loss to 4.75.

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