The United States may usher in the hottest inflation data. On the 13th local time, the U.S. Department of Labor will announce the Consumer Price Index (CPI) for June. The market expects the index to rise 8.8% year-on-year, higher than the previous value of 8.6%, continuing to hit a 41-year high since 1981. It is also expected that The month-on-month increase was 1.1%, and the previous value was 1%.
New York Stock Exchange trader Timothy Anderson said in an interview with First Financial reporter: "The CPI reports in May and June are likely to be the high point of inflation this year. In July, U.S. oil prices fell below 100 USD/barrel, commodity prices such as copper and wood have also fallen sharply, which will be reflected in the July CPI report. It’s just that July is not yet halfway through, and given the price shocks this year, anything can happen. So it is difficult to say that inflation will definitely peak in June.”
On the day before the inflation data was released (12th), White House officials admitted that price pressure will continue to increase in June, but said that the data may not yet reflect the recent decline in energy prices. reality. In a memo, White House Economic Council Director Brian Deese and White House Chief Economic Advisor Cecilia Rouse continued to blame the Ukrainian crisis for soaring prices, saying that the American people are struggling to cope with high energy and food prices. June CPI data largely fails to reflect the sharp decline in gasoline prices since mid-June. In addition, lower prices including global shipping costs, wheat prices and wholesale used cars will not be reflected in the report.
Core CPI, which excludes food and energy prices, has fallen for three consecutive months. The market expects that this indicator will continue to cool down. In June, core CPI will increase by 5.7% year-on-year, a slight decrease from the previous value of 6%. This indicator reached its peak in March this year. 6.5%; core CPI in June is expected to rise 0.5% month-on-month, compared with the previous value of 0.6%.
Worries about a global economic recession have intensified, suppressing demand for crude oil and triggering a continuous plunge in oil prices. On the 12th, WTI crude oil futures closed down nearly 8% at US$95.84/barrel; Brent crude oil futures fell below US$100/barrel, a decrease of 7.1%. According to American Automobile Association (AAA) data, the price of gasoline at U.S. gas stations has now dropped to $4.65 per gallon.
Michael Gapen, head of U.S. economic research at Bank of America, said, "What if inflation only peaks in the short term, rather than an absolute top?" He said: "We cannot completely rule out this possibility, we do not know how the energy market will respond to European sanctions on Russian oil, nor how strictly the Europeans will adhere to the timetable."
The EU said that from the end of this year to Russia's oil imports will be cut by 90%. Supply chain disruptions and labor shortages caused by the global pandemic were already sending prices soaring before the Russia-Ukraine conflict escalated, with rising commodity prices exacerbating already soaring prices.
Investment bank Jefferies money market economist Simons (Tom Simons) believes that if the CPI in June is higher than expected, it will reach an absolute peak. On the contrary, if the inflation is lower than expected, it means that inflation may be released. slow down, the market will also be encouraged. "In either case, the market will usher in a rebound after suppression." He also said that energy prices will push up June CPI by 0.7 percentage points, while housing prices will continue to record strong increases, contributing to June CPI and core CPI. ’s rise.
Sparks, head of portfolio management research at MSCI, pointed out in a report that inflationary pressures were widespread in May, and the Federal Reserve will pay close attention to whether this phenomenon will reappear in June. "The Fed's nightmare scenario is that inflation accelerates beyond energy and spreads to other components of the consumer basket."
It is only two weeks before the Federal Reserve interest rate meeting . The market generally expects that the Federal Reserve will maintain its aggressive approach and raise interest rates by 375 basis points. As of press time, according to the CME Group's FedWatch Tool, traders are betting that the probability of a 75 basis point interest rate hike this month is as high as 90.6%, and the probability of a 100 basis point interest rate hike is 9.4%.
Richmond Fed President Thomas Barkin is open to raising interest rates.He said: "I am the kind of person who likes to keep his options until the week of the meeting, and I don't want to make a decision two weeks before the meeting, but I think the forward guidance given by Powell after the last meeting was very reasonable. We will I'll reserve judgment until we get more information before the meeting, and importantly we'll get the CPI data."
