China News Service, September 14 (China News Service reporter Xie Yiguan) On September 13th local time (Tuesday), with the release of the US CPI report in August, US stock started a plunge mode, and the three major indexes all hit the largest single-day decline since June 2020.
U.S. stocks fell sharply, U.S. dollar index and US Treasury yields rose
On Tuesday, data released by the U.S. Department of Labor showed that the U.S. CPI rose 8.3% year-on-year in August, higher than the market expectations of 8.1%; rose 0.1% month-on-month, and market expectations fell 0.1% month-on-month. Excluding food and energy, the core CPI rose 6.3% year-on-year and 0.6% month-on-month, which is also higher than market expectations.
As inflation data runs beyond expectations, the US stock market fell sharply on the 13th. After the opening of in the U.S. stock market, the three major stock indexes opened low and closed low, erasing the gains in the previous few days. As of the close, the Dow Jones Industrial Average fell 1276.37 points, or 3.94%, to 31104.97 points; the S&P 500 index fell 4.32%, to 3932.69 points; the Nasdaq fell 5.16%, to 11633.57 points.
U.S. stock closing
High Top Tech stocks fell one after another, Meta fell 9.37%, Amazon fell 7.06%, Google A fell 5.90%, Apple fell 5.87%, Microsoft fell 5.5%, Tesla fell 4.04%, and the market value of the six major "technology giants" evaporated by more than US$500 billion.
is different from the decline of US stocks. After the CPI report was released, the US dollar index and US bond yields rose.
On Tuesday, most U.S. Treasury yields rose, among which the 3-year U.S. Treasury yield rose by 15 basis points to 3.767%, the 5-year U.S. Treasury yield rose by 12.8 basis points to 3.585%, and the 10-year U.S. Treasury yield rose by 4.9 basis points to 3.413%.
In addition, the U.S. dollar index, which measures the dollar against six major currencies, rose 1.37% on Tuesday, closing at 109.8150 at the end of the foreign exchange market.
Feder rate hike may continue
—Inflation exceeds expectations. The market pessimism has risen again
Although US President Biden said on Tuesday that the stock market that fell sharply due to inflation concerns on the day does not necessarily reflect the overall situation of the economy. He said he was not worried about the inflation data released on that day.
But the market is still deeply concerned. "The CPI data clearly reminds us that we still have a long way to go before inflation returns to reality." "For our economy is on a downward track, it may be too early to stop the wishful thinking of the Federal Reserve hike of interest rates."
01 local time, a customer passed by the egg container in a supermarket in San Mateo County, California, USA. China News Service reporter Liu Guanguan Photo by
The Federal Reserve has raised interest rates four times this year. From September 20 to 21, the Federal Reserve will hold its latest monetary policy meeting. "Will September be the last rate hike of 75 basis points this year" is a hot topic in recent discussions by American public opinion.
The August CPI report released on Tuesday, as a key data that affects the decision-making of the meeting, showed a lower-than-expected result, and also made the market's statement about "the last time this year" disappear.
Bloomberg News quoted economists' analysis as saying, "The Fed raises interest rates by 75 basis points in September, and the option to continue this intensity in November will be put on the agenda."
"A more 'hot' than expected CPI report means we will continue to feel the pressure from the Fed's interest rate hike," said Matt Perron, research director at Janus Henderson Investors. Peron said, "This also delays the market's expectations for the 'Feder's turn' in the short term."
Feder interest rate monitoring tool shows that as of 9:40 pm Eastern Time on September 13, the market believes that the probability of the Fed raising interest rates by 75 basis points at the September monetary policy meeting is 63%, and the probability of 100 basis points rising to 37%.
——Rate hikes "drugs may be difficult to stop" The Federal Reserve has released a "hawkish" signal
At the Jackson Hall meeting held last month, Federal Reserve Chairman Powell has sent a strong "hawkish" signal. He stressed that the Federal Reserve may need to maintain the federal funds rate at a high level for some time to curb inflation.
Data picture: Federal Reserve Chairman Powell. China News Agency reporter Sha Hanting photo
On September 8, local time, Federal Reserve Chairman Powell continued his "hawkish" position at the Jackson Hall annual meeting not long ago and said at the monetary policy meeting held by the Cato Institute that decisive and powerful actions should be taken on inflation to avoid the social costs of inflation. The Fed is firmly committed to reducing inflation, "history warns us not to relax policies too early."
On September 9th local time, Federal Reserve Director Christopher Waller also expressed that he favors "against another big" interest rate hike. He said: "The inflation rate is too high, and it is impossible to judge whether inflation continues to decline sharply. I support a sharp increase in interest rates at the meeting from September 20 to 21 to make the policy interest rate reach a level that clearly limits demand."
Huaan Securities analyst Henning believes that Fed officials have expressed their willingness to insist on hike rates until there is more convincing evidence that inflation has cooled down. Judging from the inflation data in August, core US inflation has risen again, and the Fed's actions to control inflation seem to have little effect. Considering the current resilience of the labor market, the situation of "high fever and difficulty in regressing" inflation is difficult to effectively change in the short term. Under this circumstance, it would be a high probability event that the Federal Reserve chose to raise interest rates by 75 basis points at the FOMC ( Federal Open Market Committee ) meeting in September.
"Powell reiterated that the Federal Reserve will continue to tighten monetary policy to achieve inflation control targets, suggesting that it will not turn too quickly even next year, and there may still be room for interest rate hikes in 2023." Huatai Securities believes that starting from September, the Federal Reserve may accelerate the reduction of balance sheet . The global dollar "liquidity" tension may continue to rise, and more attention should be paid to the risks posed by liquidity shocks to the global financial market. (End)
Source: China News Network
