On the evening of October 13, Beijing time, the United States announced the September consumer price index (CPI), up 8.2% year-on-year, estimated to be 8.1%, the previous value was 8.3%; it rose 0.4% month-on-month, estimated to be 0.2%, and the previous value was 0.1%. After excluding the volatile food and energy prices, the core CPI in September rose 6.6% year-on-year, higher than the market expectations of 6.5% and the previous value of 6.3%, the highest since August 1982. The number of initial unemployment claims in the United States to October 8 recorded 228,000, the highest since the week of September 1, 2022.
The latest CPI data is the reference data that needs to be considered before the Federal Reserve November meeting. Since the CPI data is higher than expected, the current swap market is fully priced at the Fed's rate hike in November 375 basis points.
Affected by this news, US stock index futures collectively fell , and Nasdaq futures fell more than 3%. The yield on the U.S. 30-year Treasury bond rose to 4% , the highest level since 2011. In addition, the three major indexes of US stocks also opened significantly lower by , the Dow Jones Industrial Average fell 1.41% during the session, the Nasdaq fell 2.86%, and the S&P 500 index fell 2.06%.
has been performing poorly recently. As of October 12, the Nasdaq and S&P indexes recorded six consecutive days of decline. The S&P index erased the gains since October and hit a new low since November 2020; the Nasdaq continued to hit a new low since July 2020.
Recently, Wall Street investment banks have made consecutive statements, and the US stock market will continue to decline. Tobias Adrian, head of currency and capital markets at the International Monetary Fund (IMF), said a shift in investor sentiment could lead to a further decline of 20%.
strengthens radical rate hike expectations
Since March 2022, the Federal Reserve has raised interest rates by 3 percentage points, of which the last three rate hikes have reached 75 basis points. Currently, the Federal Reserve's target interest rate range is 3%-3.25%. It is also expected that the rate hike cycle will continue until 2023, and the target interest rate may reach a maximum of 4.6%, which means that the Federal Reserve still has 1.35 percentage points of interest rate hike room.
On October 12, the Federal Reserve released the minutes of the September monetary policy meeting, and is expected to continue to raise interest rates and maintain interest rates at high levels until there are obvious signs of decline in inflation levels. market expects that the possibility of the Federal Reserve's interest rate hike in November will remain at 75 basis points further, and the withdrawal of funds continues.
, an inflation indicator that the Federal Reserve focuses on, the personal consumption expenditure price index (PCE) increased by 6.2% year-on-year in August. Although it fell from its high this year, it is far higher than the long-term target of 2%.
Data released by the U.S. Department of Labor on the 12th showed that the annual growth rate and monthly growth rate of the producer price index (PPI) rose to 8.5% and 0.4% in September, respectively, higher than the market expectations of 8.4% and 0.2%, indicating that inflationary pressure is still there and it takes time to ease, which also means that the Federal Reserve will continue to move forward on the road of aggressive interest rate hikes.
Bloomberg economist Eliza Winger said that the rise in PPI exceeded expectations in September, aggravating public concerns about the becoming entrenched in inflation. Although the price decline in certain commodities prices and supply chain disruptions have eased, the potential wage-price spiral, especially in the service industry, will make Fed members unanimously believe that it is necessary to continue to raise interest rates significantly.
The CPI data released on the 13th was higher than expected, and potential inflation pressure continued to rise, strengthening the Fed's expectation that the fourth rate hike of 75 basis points will be raised next month.
analysis pointed out that although inflation continues to slow down as supply chains relax and oil prices fall from spring highs, it is still far above the Fed's 2% target. Gasoline prices may have bottomed out after OPEC+ decided to cut production. The Russian-Ukrainian conflict brings upward risks to food prices. Potential inflation is largely driven by rising rental costs, and part of the inflationary pressure also comes from tight labor markets. The high inflation rate and tight labor market have allowed the Fed to maintain a positive monetary policy stance for some time.
Salman Ahmed, global head of macro and strategic asset allocation at Fidelity International, told the International Financial News reporter that "the hope of the Fed's shift from austerity policy in the short term has been shattered. The Federal Reserve raised interest rates by 75 basis points in two consecutive meetings, and has maintained its hawkish tone since the end of August. Even at the cost of severe damage to demand, the Fed seems to be determined to curb inflation. ”
collectively slandered the US stocks
According to statistics, among the nine US CPI release days before this year, the S&P 500 index closed down seven times on this key data disclosure day.
With the release of CPI data on the 13th, the three major U.S. stock indexes fell one after opening , large technology stocks generally fell , Amazon , Tesla fell more than 4 intraday %, Google , Microsoft , Apple both fell more than 2%.
Recently, Goldman Sachs managing director Scott Ruberner pointed out that US retail investors are clearing their U.S. stock portfolios and choosing to hold cash. According to the latest data released by Goldman Sachs on funds flowing from stocks into money market funds, about US$89 billion flowing into money market funds last week was the most since April 2020.
Goldman Sachs chief U.S. equity strategist David J. Kostin also said on October 9 that soaring US dollar, lower profit margins and tax changes are three key risks for corporate third-quarter performance. The bank believes that if corporate earnings declines occur simultaneously with the recession, the S&P 500 may fall to 3150 points.
htmlOn October 10, JP Morgan Chase CEO James Dimon warned that the S&P 500 may continue to fall, and the decline may "easily fall another 20%" from the current level.In addition, Michael, the big short seller on Wall Street and chief strategist at Morgan Stanley Wilson also said in its latest report that the S&P 500 will drop to 3,000 points, the P/E ratio will further drop to 13 times, and the US stock market will bottom out and the bear market will end.
Ruisui Securities issued a warning in its October 10 client report that although the S&P 500 has fallen about 25% from its peak this year, there will be more pain for stock market bulls that adopt the "buy on dips" strategy.
Starting from October 14, a new round of U.S. stock earnings season kicked off. Ruisui pointed out that although their analysts still expect corporate operating profit to grow by 8% to 10% in 2023. However, the real U.S. GDP has only slightly increased, coupled with the profit margin squeeze caused by wage increase, which means that analysts will have to lower their earnings expectations for the rest of this year and next year's earnings in the future.
Bank of U.S. Head of Stock and Quantitative Strategy Savita Subramanian reminds investors that they should "fasten their seat belts" to welcome the difficult third-quarter earnings quarter and prepare for poor stock market performance in the future. She warned that pricing has shown signs of peaking due to high inflation , but external demand is slowing. "Public companies are still expected to achieve profit growth in the third quarter, but performance guidance will be bad."
Defensive Asset Allocation
Invesco Asia Pacific (except Japan) global market strategist Zhao Yaoting previously said in an interview with the International Financial News that may continue to tighten more radically because the Fed's future monetary policy may continue to be more radically tightened, which will It means that the 10-year US bond yield may reach 5%, which has a relatively large impact on the discount rate of stocks. "But we think there are still investment opportunities. In the context of economic slowdown, it may turn to a defensive industry."
Fidelity International also maintains a defensive core investment view. Despite this, in the absence of attractive investment options, Asia is expected to provide a large number of investment opportunities in 2023, which is exciting. Wang Taosha, manager of Fidelity International Multi-Asset Fund, believes: "From many aspects, Asia will move towards a different development path in the fourth quarter of this year. The major economies in the region can provide opportunities for decentralization, mainly because they are somewhat immune to the challenges facing Europe and have less inflationary pressures. This means there is more room in Asia to drive growth-oriented policies, which is very different from what many other parts of the world have forced central banks to tighten their financial environment due to high inflation. "
" In addition, China has relaxed several real estate policies to deal with the sluggish real estate market.Nevertheless, investors must be cautious given the epidemic in China, foreign exchange volatility caused by the strengthening of the US dollar, and uncertainty related to the Bank of Japan's yield curve control strategy. But overall, our view on the Asian market is becoming more optimistic. ”
Reporter: Li Xizi
Editor: Wang Zhexi
Editor: Bi Dandan
