Investors are betting on another rate hike in May

Wall Street finished mixed yesterday

Monday has been a positive day for the Dow Jones and the S&P 500 while the Nasdaq closed slightly negative.

The S&P 500 finished at +0.1%, the Nasdaq ended the trading session at -0.03% and the Dow Jones closed at +0.3%.

Yesterday, was the first occasion for traders to react to the latest data about the US labour market because the market has been closed during the Easter holidays.

The investors' sentiment is Greed, as indicated in the graph below:

Sentiment indicator - Fear & Greed Index

The market sentiment is 61, in “Greed” mode. Last week the sentiment was Neutral, so it is improving.

Another rate hike is expected

Last Friday, the US Labour Department released the latest data about the job market for March.

U.S. Nonfarm Payrolls data have shown an increase of 236,000 new job positions last month, less than the previous month and less than the economist's predictions.

The US Unemployment Rate for March has also been published last Friday and it was 3.5%, 0.1% down from the previous reading.

The labour market has started to slow down, based on the recent data, but that is not enough for the investors that are now betting on another interest rate increase of the Federal Reserve to fight inflation which is also caused by the strong job market.

As shown in the graph below 66.4% of traders are expecting another rate hike of 0.25% at the next Fed meeting on 3 May.

The remaining 33.6% of investors are forecasting a no-rate increase at the next FOMC.


What to watch today

Today, there is no important data to watch and the market should not be volatile because everyone is expecting the release of the consumer inflation data tomorrow and the producer price inflation on Thursday.

The Fed's final decision regarding the next monetary policy action will be, however, influenced by the above data.

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