Notice of Index Modifications: Ferrari ETPs

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Author

Violeta Todorova

Date

Fed Sees Only One Interest Rate Cut in 2024

Your capital is at risk if you invest. You could lose all your investment. Please see the full risk warning here.

  • The Federal Reserve keeps interest rates unchanged for eight months in a raw
  • The Fed delivers a hawkish surprise and only sees one rate cut this year

FOMC Meeting Summary

Following its latest policy meeting on Wednesday the Federal Reserve kept its benchmark interest rate unchanged in the range of 5.25% to 5.50% as widely expected. The committee cited recent indicators suggesting continued solid economic growth, strong job gains, and a low unemployment rate. However, inflation remains elevated, and the committee does not expect to reduce the target range until it has gained greater confidence that inflation is moving sustainably toward the 2% goal.

The central bank delivered a hawkish surprise and announced it only sees one rate cut in 2024 from three expected back in March, as it projects inflation to remain higher than previously expected.

Key Takeaways

Interest Rates: The Federal Reserve projects the benchmark interest rate to fall to 5.1% this year. In 2025, Fed members expect interest rates to fall to 4.1%, up from a previous forecast for 3.9%. In 2026, the central bank sees rates declining to 3.1%.

While the majority of the committee members envisaged one rate cut this year, four members supported no rate cuts at all. Clearly the Fed’s projections were more hawkish than expected and are a result of the increased inflation forecast, following a string of elevated inflation data in the first three months of the year.

Inflation: The U.S. consumer price index (CPI) increased 3.3% in May on an annual basis, slightly below economists’ expectations of 3.4%. This cooler-than-expected inflation data fuelled optimism that the disinflation trend remains intact, though the Fed cautioned that it would require more consistent progress to consider lowering interest rates.

Labour Market: The labour market continues to show resilience, with the U.S. non-farm payroll report showing the labour market adding 272,000 jobs in May. However, the unemployment rate rose to 4% in May, the highest level in over two years, driven by people unable to find work after returning to the labour force.

Meanwhile, the central bank sees the unemployment rate at 4% this year, unchanged from the prior forecast in March. In 2025, the unemployment is now expected to increase to 4.2%, up 0.1% from the previous projection of 4.1%.

Wage Growth: Average hourly earnings rose by 0.4% month-over-month and 4.1% year-over-year in May, indicating that wage growth remains strong.

Inflation Projections: The core personal consumption expenditures price index (PCE), which is the Fed’s preferred measure of inflation, is forecast to be 2.8% in 2024, up from a prior forecast of 2.6%. For 2025, inflation is estimated to be 2.3%, up from 2.2% previously. The forecast for gross domestic product (GDP) was left unchanged at 2.1% for 2024 and 2% for 2025.

A graph of stock market

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Source: TradingView

Market Outlook:

The S&P 500 posted a fresh record high of 5,447 on Wednesday as the softer than expected inflation data overshadowed the Fed’s outlook for one rate cut by year end.

The slower than expected inflation in May is encouraging and revives the optimism that the disinflationary trend is intact. If inflation continues to moderate in the coming months the Fed may be inclined to deliver more than one cut in 2024, which would be positive for the broader stock market.

Wednesday’s price action broke above its uptrend channel line, suggesting that in the short-term the index is likely to retreat.

The Relative Strength Index (RSI) reached overbought territory pointing to a likely pull back to unwind the overbought momentum conditions. While we remain positive in the long-term and levels in the range of 5,600 – 5,650 remain feasible by year end, a correction to 5,200 in the short-term is possible.

Professional traders looking for magnified exposure to the U.S. stock market may consider Leverage Shares +5x Long US 500 or -3x Short US 500 ETPs.

Websim is the retail division of Intermonte, the primary intermediary of the Italian stock exchange for institutional investors. Leverage Shares often features in its speculative analysis based on macros/fundamentals. However, the information is published in Italian. To provide better information for our non-Italian investors, we bring to you a quick translation of the analysis they present to Italian retail investors. To ensure rapid delivery, text in the charts will not be translated. The views expressed here are of Websim. Leverage Shares in no way endorses these views. If you are unsure about the suitability of an investment, please seek financial advice. View the original at

Your capital is at risk if you invest. You could lose all your investment. Please see the full risk warning here.

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Terms and Conditions

Notice

If you are not classified as an institutional investor, you will be categorised as a private/retail investor. At this time, we cannot send communications directly to private/retail investors. You are welcome to view the contents of this website.

If you are an ‘Institutional investor’, you affirm either that you are a Per Se Professional Client, or that you wish to be treated as an Eligible Counterparty Client, both as defined under the Markets in Financial Instruments Directive, or an equivalent in a jurisdiction outside the European Economic Area.

Risk Warnings

The value of an investment in ETPs may go down as well as up and past performance is not a reliable indicator of future performance. Trading in ETPs may not be suitable for all types of investor as they carry a high degree of risk. You may lose all of your initial investment. Only speculate with money you can afford to lose. Changes in exchange rates may also cause your investment to go up or down in value. Tax laws may be subject to change. Please ensure that you fully understand the risks involved. If in any doubt, please seek independent financial advice. Investors should refer to the section entitled “Risk Factors” in the relevant prospectus for further details of these and other risks associated with an investment in the securities offered by the Issuer.

This website is provided for your general information only and does not constitute investment advice or an offer to sell or the solicitation of an offer to buy any investment.

Nothing on this website is advice on the merits of any product or investment, nothing constitutes investment, legal, tax or any other advice nor is it to be relied on in making an investment decision. Prospective investors should obtain independent investment advice and inform themselves as to applicable legal requirements, exchange control regulations and taxes in their jurisdiction.

This website complies with the regulatory requirements of the United Kingdom. There may be laws in your country of nationality or residence or in the country from which you access this website which restrict the extent to which the website may be made available to you.

United States Visitors

The information provided on this site is not directed to any United States person or any person in the United States, any state thereof, or any of its territories or possessions.

Persons accessing this website in the European Economic Area

Access to this site is restricted to Non-U.S. Persons outside the United States within the meaning of Regulation S under the U.S. Securities Act of 1933, as amended (the “Securities Act”). Each person accessing this site, by so doing, acknowledges that: (1) it is not a U.S. person (within the meaning of Regulation S under the Securities Act) and is located outside the U.S. (within the meaning of Regulation S under the Securities Act); and (2) any securities described herein (A) have not been and will not be registered under the Securities Act or with any securities regulatory authority of any state or other jurisdiction and (B) may not be offered, sold, pledged or otherwise transferred except to persons outside the U.S. in accordance with Regulation S under the Securities Act pursuant to the terms of such securities. None of the funds on this website are registered under the United States Investment Advisers Act of 1940, as amended (the “Advisers Act”).

Exclusion of Liability

Certain documents made available on the website have been prepared and issued by persons other than Leverage Shares Management Company. This includes any Prospectus document. Leverage Shares Management Company is not responsible in any way for the content of any such document. Except in those cases, the information on the website has been given in good faith and every effort has been made to ensure its accuracy. Nevertheless, Leverage Shares Management Company shall not be responsible for loss occasioned as a result of reliance placed on any part of the website and it makes no guarantee as to the accuracy of any information or content on the website. The description of any ETP Security referred to in this website is a general one. The terms and conditions applicable to investors will be set out in the Prospectus, available on the website and should be read prior to making any investment.

Leverage Investment

Leverage Shares exchange-traded products (ETPs) provide leveraged exposure and are only suitable for experienced investors with knowledge of the risks and potential benefits of leveraged investment strategies.

Cookies

Leverage Shares Management Company may collect data about your computer, including, where available, your IP address, operating system and browser type, for system administration and other similar purposes (click here for more information). These are statistical data about users’ browsing actions and patterns, and they do not identify any individual user of the website. This is achieved by the use of cookies. A cookie is a small file of letters and numbers that is put on your computer if you agree to accept it. By clicking ‘I agree’ below, you are consenting to the use of cookies as described here. These cookies allow you to be distinguished from other users of the website, which helps Leverage Shares Company provide you with a better experience when you browse the website and also allows the website to be improved from time to time. Please note that you can adjust your browser settings to delete or block cookies, but you may not be able to access parts of our website without them.

This website is maintained by Leverage Shares Management Company, which is a limited liability company and is incorporated in Ireland with registered offices at 2 Grand Canal Square, Grand Canal Harbour, Dublin 2.

By clicking you agree to the Terms and Conditions displayed.