Hidden Bullish Signals Detected Ahead of US Inflation Report

Tomorrow it's time again: The US inflation data will be released. Over the past two years, the significance of this report has increased significantly, as it allows conclusions to be drawn about the future monetary policy of the Fed. Accordingly, the monthly event is associated with a lot of volatility, comparable to that seen when the labor market data is released - at least. A look at the 10-year government bonds gives us an idea of how the data will turn out and, in particular, how the market will react to it. Initially, from a chart technical perspective, we see a clear hidden bullish divergence between price and the VOLD indicator. This divergence is most pronounced on the M30 chart, allowing for conclusions about price movements within the next few days, roughly until the end of the week. A look at the put-call sentiment of the bond futures (ZNM24) also shows a very bearish assessment by investors - a signal that has repeatedly proven to be an excellent contrarian indicator. Therefore, we expect the bond price to be positively influenced by the upcoming data and accordingly, interest rates to decline. This, in turn, is bullish for the US stock markets. There are thus good reasons to be optimistic about the new week.