US Short-Term Inflation Expectations Hit Highest Level Since 2023

Rising inflation expectations are increasing concerns that the Federal Reserve may delay rate cuts or continue tightening, potentially weighing on equities. Although the SPX is trading just above its 20-day moving average (7499.87), the RSI at 52.35 in neutral territory and the MACD showing signs of falling below its signal line indicate weakening short-term momentum. The negative sentiment from the news, combined with this fragility in technical indicators, raises the risk of the index slipping below its 20-day average. However, the decline is likely to be limited as the 50-day moving average (7455.22) stands as a nearby support level.

NDX has fallen 2.75% in the last 24 hours to 29,190, with technical indicators pointing to weakening momentum. The RSI is approaching the oversold zone at 38.7, while the MACD line remains below the signal line and in negative territory, indicating short-term downward momentum. The price is trading below both the 20-day and 50-day moving averages (29,531 and 29,627, respectively), further darkening the technical outlook. Rising inflation expectations in the news could reduce hopes for interest rate cuts, putting pressure on growth stocks. Therefore, the likelihood of a continued short-term downtrend is high.

The news indicates that rising inflation expectations could support the Fed's tightening policy and strengthen the DXY. Technical indicators also support this view: the RSI is above the neutral zone at 55, the MACD is above the signal line, and the price is above both the 20-day and 50-day moving averages. However, there is a risk that the upside movement may be limited, as the increase in inflation expectations may already be priced in and the market may be awaiting the Fed's response. Therefore, I expect an upward impact with moderate confidence.