Get ready for the April CPI reading

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Markets were quiet on Tuesday as investors braced for key inflation reports due later in the day and Thursday.

• US stocks closed lower on Tuesday as investors await the Consumer Price Index later in the day. European markets also closed in the red. The Stoxx 600 lost 0.3% on the back of a 1.2% decline in technology stocks.

• US President Joe Biden met with top lawmakers on Tuesday to discuss the country’s debt ceiling — but House Speaker Kevin McCarthy said he didn’t see “any new movement” on the deal. McCarthy added that Biden will meet with other party leaders on Friday.

• Shares of Airbnb sank 11.2% in extended trade after the company warned it would face a difficult second quarter, suggesting consumers are pulling back from travel. However, Airbnb reported net income of $117 million for the first quarter, compared to a loss of $19 million in the previous year.

• First time home buyers in the UK will be able to borrow up to 100% of the property value without a deposit, in the new Skipton Building Society mortgage scheme. It is said to be the first time since 2008 that a 100% mortgage has been brought to market.

• forefront Economists expect the US Consumer Price Index to show that prices are still on the rise, largely due to an expected recovery in used car prices. Stubbornly high inflation would pressure the Federal Reserve to keep interest rates unchanged.

Markets were quiet on Tuesday as investors braced for key inflation reports due later in the day and Thursday.

Investors’ hesitation reflected lower trading volume on Tuesday. The SPDR S&P 500 ETF Trust (SPY), which tracks the S&P index, traded 44 million shares, below its 30-day average of 76.1 million. Major stock indices mostly fell, but only partially. The S&P 500 fell 0.46%, the Dow Jones Industrial Average was mostly flat and the Nasdaq Composite lost 0.6%.

For regional banks that have had a week of volatile rate swings, this was a welcome respite. The SBDR S&P regional banking ETF lost 0.4%, but Pacoist, the beleaguered Los Angeles-based lender, managed to gain 2.35%.

Most of the big swings occurred in extended trading as a large number of companies reported earnings after the bell. Airbnb fell 11.2% and Twilio sank 14.7% after both companies issued weaker-than-expected forecasts for the second quarter. One bright spot: Shares of electric car maker Rivian rose 6.4% after the company’s net loss shrank more than analysts expected.

Investors are hopeful that the CPI reading for April will show a decline in prices. But there are signs that inflation will not subside as quickly as many would like. Economists believe that the consumer price index for April will remain unchanged from what it was in March. The April jobs report showed that the labor market remains strong, which could contribute to price pressures. In fact, New York Federal Reserve Bank President John Williams said he doesn’t expect inflation to drop to 2% until the next two years. It could be a bumpy road ahead, both for the economy and for the markets.

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