Data released on Wednesday night showed that the U.S. CPI increased by 9.1% year-on-year in June, exceeding market expectations of 8.8%, and the growth rate was the highest since 1981. The market believes that the Federal Reserve will take more aggressive measures to fight inflat

Data released by

on Wednesday night showed that the U.S. CPI increased by 9.1% year-on-year in June, exceeding market expectations of 8.8%, and the growth rate was the highest since 1981.

The market believes that the Federal Reserve will take more radical measures to fight inflation, European and American stocks and bonds are all diving , the US dollar has risen in the short term, and gold has weakened significantly.

01

9.1! Inflation explodes

html On July 13, the US Department of Labor released data showing that the US CPI in June was 9.1% year-on-year, which was expected to be 8.8% and the previous value was 8.6%. The core CPI in the United States in June was 5.9% year-on-year, compared with the expected 5.7% and the previous value of 6%.

The CPI increased by 1.3% month-on-month, setting a record since 2005, and increased by 9.1% year-on-year, the largest increase since the end of 1981.

Prices for goods rose broadly across the United States, with gasoline prices up 11.2% from the previous month, far outpacing other categories, although gas prices have been falling in recent weeks. Prices for energy services, including electricity and natural gas, rose 3.5%, the largest increase since 2006.

The Labor Department also stated that rising housing and food prices are also major factors in inflation. Food costs rose 10.4% year-on-year, the largest increase since 1981. Primary residential rents rose 0.8% from May, the largest monthly increase since 1986.

However, real wages fell for the 15th consecutive month.

02

May usher in a faster interest rate hike

Inflation in the United States accelerated faster than expected in June, and price pressure is huge. The Federal Reserve may raise interest rates again later this month. A 75 basis point interest rate hike in July is already the "basic setting", and the market The probability of raising interest rates by 100 basis points is now believed to be 30%.

European and American stocks and bonds all plunged, the U.S. dollar rose in the short term, and gold weakened sharply.

Affected by expectations of interest rate hikes , US stock stock index futures plummeted. As of press time, Nasdaq futures have fallen by more than 2%, S&P 500 index futures have fallen by 1.6%, and Dow futures have fallen by more than 1%.

The US dollar index has risen by about 50 points in the short term and is now at 108.49.

Spot gold has experienced a short-term plunge and is currently trading at $1,712.35 per ounce.

Inflation data once again proves that price pressures are widespread across the economy and continue to undermine purchasing power and confidence. This will allow Fed officials to continue their policy approach to control demand and increase pressure on U.S. President Biden and congressional Democrats, whose approval ratings have fallen sharply ahead of the midterm elections.

While many economists believe this figure will be the peak of the current inflation cycle, several factors including housing and gasoline will keep price pressures elevated for longer.

Fed policymakers have signaled a second rate hike of 75 basis points later this month as inflation persists and employment and wage growth remain strong. Even the swap price after the release of the US CPI showed that the market’s expectation for the Fed’s interest rate hike in July was 79 basis points.

Previously, Jianwenjun’s analysis pointed out that this year’s U.S. inflation data is crucial because it determines the Federal Reserve’s future interest rate hike path . Although the overall situation of the Federal Reserve raising interest rates by 75 basis points in July has been determined, there are still variables in the interest rate hikes at subsequent meetings. Fed officials have said they could slow the pace of rate increases to half a percentage point after July, but they want to see compelling evidence that inflation is slowing before moving to a more traditional quarter-percentage point hike.

Yardeni Research President Ed Yardeni's inflation forecast is in line with the average estimate of economists. Regarding the June CPI data, he said that "bad news" will come again and inflation will hit a new high. Lower-wage workers, the class hardest hit by inflation, have no choice but to allocate much of their budgets to necessities such as "food, fuel and rent." Higher-wage workers are also being squeezed by inflation, but they may have more savings and can readily cut discretionary spending, which has contributed to the recent weakness.

Omair Sharif, founder of Inflation Insights, said "If June is the start of lower core CPI data, which is what the Fed wants to see, I think comments from Fed officials will soon turn to 9 A 50 basis point interest rate hike was announced in March, and more people are calling for a slowdown to a 25 basis point rate increase later this year.

Nick Timiraos, a reporter for the Wall Street Journal known as the "New Federal Reserve News Agency," said housing. Sectors can provide more fuel for inflation, so prices in other sectors would need to fall significantly to see overall U.S. inflation decline. Rising housing costs will keep inflation elevated this year, posing a challenge for Fed officials who want to see signs that price pressures are easing before slowing the pace of rate hikes.

Deutsche Bank Economists said in a note that if inflation measures do not fall as expected in the coming months, it could lead to a more painful adjustment in the Fed's monetary policy stance. This would increase recession risks, as bigger and faster rate hikes would take a larger toll on demand. (Editor Wang Li)

⭐ Star mark Wall Street News , don’t miss good content ⭐

This article does not constitute personal investment advice, nor does it take into account the special investment objectives, financial situation or needs of individual users. Users should consider whether any opinions, views or conclusions contained in this article are appropriate to their particular circumstances. The market is risky, investment needs to be prudent, and please make independent judgments and decisions.

does not have the highest, only higher