With inflation data due this week, we expect to see some volatility in equities. Based on how markets have reacted to the reflation trade thus far, a higher than expected PCE outcome could be negative for stocks though one would also expect firms to rebalance their portfolios and look to buy stocks that perform well in a less accommodative monetary policy cycle so we will need to see how the market trades the news. Note the correlation between safe-haven currencies and the volatility in equities as well as the strength and weakness of the USDollar.

Below I have provided the scenario for bulls and bears while also taking March pivot points into consideration.

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