The latest data released by the U.S. Department of Labor on the 14th showed that due to the high energy prices, the U.S. producer price index (PPI) rose 11.3% year-on-year in June, recording a two-digit increase for the seventh consecutive month, far higher than the expected 10.7%, and the previous value was revised up to 10.9%; it rose 1.1% month-on-month, far worse than the expected value of 0.8%, and the previous value was 0.8%.
Given that cost pressure is transmitted step by step through the supply chain, the continued upward rise of PPI usually indicates an increase in consumer inflation in the future. Analysts believe that the overall trend of PPI shows that the inflation challenges facing the United States are deeply rooted under the combined effect of the Russian-Ukrainian conflict and supply chain bottlenecks.
opened on Thursday, and US stock was under significant pressure. As of the time of publication of the First Financial reporter, the Dow Jones Industrial Average fell more than 600 points, a drop of 2%, to 30,162 points, the S&P 500 index fell 72.7 points, a drop of 1.91%, to 3,729 points, and the Nasdaq fell 193.5 points, a drop of 1.7%, to 11,061 points.
30 Dow component fell across the board, JPMorgan fell more than 5%, Goldman Sachs fell nearly 4%, American Express fell 3.5%, Caterpillar and Chevron both fell more than 3%.
WTI crude oil futures fell by 6% to US$90.60. Spot gold fell below the $1,700 mark, falling by more than 2% intraday.
The probability of hiking interest rates by 3100 basis points soaring to 88.7%
Data from the U.S. Department of Labor shows that the year-on-year increase of core PPI after excluding food, energy and trade services prices slowed down to 6.4%, with the previous value of 6.7%; the month-on-month increase fell to 0.3%, better than the market expectations of 0.5%, and the previous value of 0.4%.
Inflation momentum has not slowed down, causing investors to increase expectations for the huge interest rate hike of the Federal Reserve at the end of July. After the data was released, the Fed Watch Tool of the Chicago Mercantile Exchange showed that traders expect the probability of 100 basis points hikes after the monetary policy meeting on July 27 soaring to 88.7%, and the probability of 75 basis points hikes is only 11.3%.
The day before, data released by the U.S. Department of Labor showed that due to the soaring energy prices, the U.S. consumer price index (CPI) rose 1.3% month-on-month in June, setting a new high since September 2005, with an expected value of 1.1%, and the previous value of 1%; an increase of 9.1% year-on-year, the largest increase since November 1981, with an expected value of 8.8% and an previous value of 8.6%.
The next monetary policy meeting of the Federal Reserve will be held in Washington from the 26th to the 27th of this month local time.
Bank of the United States predicts that the United States will enter a recession in the second half of this year
On Thursday, JPMorgan Chase's financial report showed that profits in the last quarter fell 28% compared with the same period last year. JPMorgan Chase Chairman and CEO Jamie Dimon warned in the bank's financial statement: "Geopolitical tension, high inflation, weakened consumer confidence, the Federal Reserve's interest rate hike is unknown, unprecedented quantitative tightening and its impact on global liquidity, coupled with the Russian-Ukrainian conflict and its negative impact on global energy and food prices, will have a negative impact on the future of the global economy."
's concerns about the recession have intensified, driving safe-haven funds into US Treasury . The 10-year US Treasury yield was about 2.967%, and the 2-year US Treasury yield, which is more sensitive to changes in monetary policy, rose 7 basis points to 3.213%, which brought the spread between the 2-year and 10-year US Treasury yields to the highest level since 2000. The inverted yield curve is generally seen as a recession alarm.
Analysts at Bank of America have significantly lowered the S&P 500 index's year-end point forecast from the previous 4,500 points to 3,600 points. Analysts warn that in the worst case, the S&P 500 index may fall to 3,000-3,200 points. On Wednesday, the S&P 500 closed at 3801.78 points. The bank predicts that the United States will enter a recession in the second half of this year.
PPI data sub-item showed that commodity prices rose by 2.4% month-on-month that month, contributing three-quarters of the PPI increase, and for the sixth consecutive month of increase. Among them, nearly 90% of the increase can be traced to energy prices, which rose by 10% month-on-month that month. At the same time, service prices rose by 0.4% month-on-month, with the previous value of 0.6%.
US Treasury Secretary Yellen blamed inflation on the conflict between Russia and Ukraine when attending the meeting of G20 Treasury Secretary and Central Bank Governors in Bali, saying that setting upper limits on Russian oil prices is "one of the most powerful tools" to resolve inflationary pressure on American people and households around the world.
