[Text/Observer Network Zhou Yibo]
On October 13th local time, a report released by the U.S. Department of Labor showed that after excluding the volatile food and energy prices, the U.S. core consumer price index (CPI) has risen by 0.6% month-on-month for two consecutive months, and the core CPI in September rose by 6.6% year-on-year, reaching the highest level since 1982.
Among them, housing costs, which account for about one-third of the CPI, have risen by 0.7% month-on-month for two consecutive months, and the year-on-year increase has reached 6.6%. Market analysts say the hot U.S. housing market is continuing to drive the country's inflation higher.
The release of this report also caused shock in the US financial market. US stocks hrs across the board before the market opened. The decline of the three major indexes once reached about 2% after the opening, but then they staged a "big reversal" of falling first and then rising. Many financial insiders analyzed that the report will strengthen the determination of the Federal Reserve to raise interest rates by another this year, and the federal funds rate may be a foregone conclusion at the end of this year.
Bloomberg analyzed that this is the last CPI report released before the 2022 US midterm elections, posing a "serious threat" to US President Biden and the Democratic Party's goal of winning the midterm elections. According to Fox News, soaring inflation has caused many difficulties for the normal lives of people across the United States. Some people bluntly stated that the Biden administration should be responsible for this.
htmlOn 13, Biden responded on Twitter that the American people have been suffering from the cost of living for many years and do not need this report to remind them specifically.
Screensure of the website of the U.S. Department of Labor Bureau of Labor Statistics
U.S. house prices in September drove the core CPI to soar, hitting a 40-year high
According to a report released by the U.S. Department of Labor on the 13th, the U.S. CPI in September increased by 0.4% month-on-month and 8.2% year-on-year. The month-on-month increase of exceeded the market's general expectations by 0.3%. Although the year-on-year increase narrowed by 0.1 percentage point from August, it is still at a historical high.
Specifically, although the US gasoline price fell in September, down 4.9% month-on-month, there is still an increase of 18.2% compared with the same period last year. Meanwhile, U.S. electricity and gas prices rose by 0.4% and 2.9% month-on-month in September, respectively.
In addition to the energy sector, the United States' food prices rose by 0.8% month-on-month, a year-on-year increase of 11.2%; the price of medical services rose by 1.0% month-on-month, a year-on-year increase of 6.5%; the price of transportation services rose by 1.9% month-on-month, a year-on-year increase of 14.6%.
It is worth noting that in this report, housing costs, which account for about one-third of the CPI, have risen by 0.7% month-on-month for two consecutive months, and the year-on-year increase has reached 6.6%.
Among them, "main residence rent" and "owner's equivalent rent" (the amount of rent that must be paid to replace the currently owned house with rental property) both increased by 6.7% year-on-year, setting a record high.
Montreal Bank U.S. interest rate strategy director Ian Lingen pointed out in an interview with First Financial reporter that the hot housing market in the United States is continuing to drive the country's inflation higher.
"The 30-year mortgage interest rate soared to its highest level since 2007, but the impact on the real estate market has only recently begun to appear. It is too early to expect the real estate market to usher in a turning point and be reflected in the inflation report. Investors can further observe in the fourth quarter economic data." Lingen said, "If the Federal Reserve is determined to ease core inflation, it needs to cool down the real estate market."
In summary, after excluding the volatile food and energy prices, the US core CPI rose by 0.6% month-on-month for two consecutive months, and the year-on-year increase also expanded by 0.3 percentage points to 6.6%, the largest year-on-year increase since August 1982, higher than the previous value of 6.3%.
In addition, the U.S. Department of Labor report also released another key indicator for measuring inflation - the Producer Price Index (PPI). Relevant data show that from August to September, the U.S. PPI rose 0.4%, surpassing the 0.2% increase estimated by economists.
Data on CPIs in the U.S. Department of Labor’s report on various projects
Inflation is high, and the Federal Reserve raises interest rates by another 125 basis points this year may be a foregone conclusion
After this release by the U.S. Department of Labor, it caused shocks in the financial market.U.S. Treasury yields soared, with the 30-year Treasury yield once reaching 4%, the highest level since 2011.
As for US stocks, there was a big reversal of opening low and closing high: US stocks plunged across the board before the market, and the decline of the three major indexes once reached about 2% after the opening. However, as of the close of October 13, Eastern Time, the Dow Jones Index rose 2.83%; the S&P 500 Index rose 2.6%, and the Nasdaq Index rose 2.23%. The Dow Jones Industrial Average fluctuated more than 1,500 points during the session, and the S&P 500 and Nasdaq ended their daily line for six consecutive declines.
Some analysts pointed out that after the release of the "explosive" inflation data, the main reason why the US stock market fell first and then rose may be that the market has been worried about the risk boots of the Federal Reserve's interest rate hike.
As of the close of October 13, Eastern Time, the changes in various indexes in the US financial market
Since this year, the Federal Reserve has announced interest rate hikes many times to deal with high inflation. On October 12, the Federal Reserve released the September minutes of the Federal Open Market Committee (FOMC). According to the minutes of the meeting, the Federal Reserve is likely to raise interest rates by 75 basis points and 50 basis points respectively at the November and December meetings, which is to raise the federal funds rate to the range of 4.25% to 4.50% by the end of this year.
Bloomberg pointed out that given the continued flexibility of the U.S. labor market and consumer demand, the latest inflation data from the U.S. Department of Labor may strengthen the Federal Reserve's determination to complete its interest rate hike plan.
According to the " Wall Street Journal " on the 13th, many American financial market insiders believe that with the release of this report, the Federal Reserve's interest rate hike of another 125 basis points this year may be a foregone conclusion.
Jason Pride, chief investment officer of private wealth of Granmide Trust, said, "Today's report should encourage the Fed to raise interest rates by 125 basis points by the end of the year in an effort to push interest rates firmly above neutral to a reliable fight against inflation."
"The market wants to see inflation cool down, but it is not the case, which will allow the Fed to go longer and further on the road to rate hikes." McCain, chief investment officer of Frost Investment Consulting, said, "We expect the Fed to continue to advance the most radical tightening cycle since the 1980s, which will bring interest rates to the 4.25% to 4.5% range by the end of the year."
"While someone will definitely want to discuss the possibility of (the Federal Reserve) raising interest rates by 100 basis points in November, this report determines the possibility of (the possibility) raising interest rates by 75 basis points in November." Lingen said, "The more relevant question is whether the (the Federal Reserve) rate hike will expand in December and February (next year)."
market expects that by March 2023, the federal funds rate will peak at 4.85%. U.S. short-term interest rate traders expect that the possibility of the Federal Reserve's policy interest rate reaching the range of 4.75%-5% in March 2023 is becoming increasingly high.
Although the Fed is committed to combating high inflation through interest rates, Bloomberg analyzed that even if the growth of US CPI may slow down in the coming months, achieving the Fed's goal of "reducing inflation to 2%" will still be a slow process.
On September 21, after the Federal Reserve announced a 75 basis point rate hike, Federal Reserve Chairman Powell held a press conference. Source: Pengpai Image
Americans complain about life pressure, Biden's midterm election pressure doubled
The report of the U.S. Department of Labor also pointed out that high inflation has spread to the entire economic field of the United States and is eroding the wages and salaries of Americans, forcing many people to rely on savings and credit cards to support their lives.
According to Fox News on the 13th, people from various states in the United States have complained about the burden of life brought by high inflation.
"This is too outrageous, it's really getting crazy." Alfred from Oklahoma City , said, "It's too expensive to go to the food market. This number has almost doubled compared to the past few years, especially since I have a huge family."
Kara, from Bellingham, Washington, said that she had maintained her life well before, but now she can't stand it anymore. "We made a lot of money, but there's no difference in results."
"Everything I like to buy has to spend more money."Tim from Hotel Hotel Hotel , the capital of Hotel , said, "I don't like this situation, such as gas, food, vacation (price). ”
Tim’s wife Bonnie added: “I just retired and I’m a little worried about my pension. ”
Alfred interviewed by Fox News Video screenshot
Another resident from Bellingham City Elizabeth said bluntly that he was no longer shopping. "It is ridiculous that he can't afford meat and eggs to go to the store. I bought two small packets (food) and paid more than $100."
"I don't think government officials will encounter any of the things that ordinary people have to face. "Elizabeth said, "We live a difficult life. ”
It is reported that when asked who should be responsible for the soaring cost of living, the interviewed people gave different views.
“I think it is up to the left, not Joe Biden himself. "Erika from , New Jersey, said, "because there is not only one chef in the kitchen. ”
“I would think it’s the president himself to blame, but this is just my personal opinion. "Susanna from , Washington state, , said.
"I think the last administration failed to put us in a good state." "Ashley from New Jersey said, "I honestly feel they all have a responsibility." ”
Screenshot of Fox News in the United States
The 2022 US midterm election will officially start on November 8, when the Democratic Republican parties in the United States will re-election over the control of Congress.
The U.S. Department of Labor released the last report on CPI data before the midterm elections on the 13th. Bloomberg pointed out that these data pose a "serious threat" to Biden and the Democratic Party's goal of maintaining control over Congress.
13, Biden indirectly responded to the report of Department of Labor on Twitter, trying to weaken its negative impact on himself.
"Americans have been squeezed by the cost of living: this has been the case for many years, and they do not need today's report to know about this matter. "This is also a key reason why I run for president - I will be committed to getting more breathing space for middle-class families to handle the cost of living, which is very important. ”
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