Inflation in the United States has not yet peaked, and the CPI in the United States in May exceeded expectations.
On June 10, local time, the U.S. Department of Labor released data showing that the U.S. CPI rose to 8.6% year-on-year in May, hitting a record high in December 1981 and far exceeding expectations of 8.2%. Core CPI rose to 6% year-on-year, from the previous value of 6.2%, which was also higher than the market's previous forecast of 5.9%.
After the release of inflation data, the market generally raised its expectations for the pace of interest rate hikes by the Federal Reserve; high inflation data intensified the market's concerns about the economy falling into recession. At the same time, the Fed seems to be facing greater challenges if it wants to achieve a "soft landing."
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Energy, housing, and food are the main driving factors for the increase in U.S. CPI in May.
Looking at the key sub-items that affect CPI, in terms of the growth rate contributed by seasonally adjusted month-on-month, how much did the energy item contribute to the 0.32% increase? , ranking first; the residential item contributed an increase of 0.19%, and the food item contributed an increase of 0.16%, ranking second and third. In terms of year-on-year growth rate contribution, the energy item contributed an increase of 2.86%. Ranking first, residential items and food items contributed 1.78% and 1.36% growth respectively. In addition, the gasoline index rose by 4.1% in May, and other energy indexes also rose.
Oil prices and food prices are high, and travel demand surges in summer. As well as the unabated growth rate of housing items, the year-on-year growth rate of U.S. CPI in June is still at a high level of around 8.5%, and U.S. inflation may still be in the process of peaking in the third quarter.
First of all, although the international crude oil price did not exceed the 3 high point, However, judging from the actual impact of CPI on gasoline prices, U.S. gasoline prices in May were further higher than in March. From the data as of June 6, gasoline prices further rose from $4.44/gallon at the end of May to $4.70/gallon. gallons, it is expected that gasoline prices may still rise in June.
Secondly, travel demand will gradually increase in summer. Under this influence, the prices of new cars, used cars, air tickets, public transportation and other travel-related goods and services may remain high or further rise. .
Again, based on the historical relationship that house prices lead rents by 15-16 months, the peak of U.S. housing prices after the epidemic will be in July 2021. Therefore, the growth rate of subsequent residential projects may still be difficult to slow down. In summary, U.S. CPI in June. The year-on-year growth rate may still be high around 8.5%.
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CPI continues to explode | The theory of inflation peaking is bankrupt, Biden and the Federal Reserve's "Alexander"
5 CPI data unexpectedly accelerated the sharp rise, shattering the fact that inflation has peaked and begun Hopes of a pullback have put pressure on the Federal Reserve to extend a series of aggressive rate hikes and exacerbated political problems for the White House and Democrats.
Two-year U.S. Treasury yields jumped after the inflation data, stock index futures fell and the dollar gained. Traders are fully pricing in 50 basis point rate hikes by the Fed at three policy meetings in June, July and September.
Record gasoline prices, coupled with high food and housing costs, are exerting tremendous pressure on Americans' cost of living, suggesting that the Federal Reserve will have to apply the brakes more harshly on the economy.
Consumer spending has so far held steady in the face of inflation, supported by savings and credit cards. Some economists worry that the Fed will go too far in tightening policy and could lead to lower spending.
This increases the risk of a recession, which some economists already believe could occur next year.
A further spike in inflation could also spell more trouble for President Joe Biden, whose approval ratings have plunged to new lows ahead of midterm elections later this year. While the job market remains a bright spot, decades of high inflation are eroding the confidence of the American people.
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Wall Street is alarmed that the Fed will start a 75 basis point interest rate hike.
In the context of high inflation, Wall Street began to discuss whether the Federal Reserve will raise interest rates by 75 basis points.
Barclays became the first company to predict a 75 basis point interest rate hike. Major Wall Street banks even predict that interest rates will be raised by this amount after June 16 this week. Some traders believe that there is a 50% probability of raising interest rates by 75 basis points in July. Central banks of many countries will hold interest rate decision-making meetings this week. India, Australia has raised interest rates again to curb inflation. The European Central Bank also said it plans to raise interest rates by 25 basis points in July.
Swaps linked to the Fed's interest rate meeting date show that the probability of the Fed raising interest rates by at least 50 basis points in June is 100%. , the probability of raising interest rates by 75 basis points is 28.2%, the probability of raising interest rates by at least 50 basis points in July is 100%, the probability of raising interest rates by 75 basis points is 43.4%, and the remaining five meetings throughout the year will raise interest rates by about 245 times. basis points to increase interest rates to 3.27%.
