/// The United States' CPI "breaks eight" for seven consecutive months hikes 100 basis points and returns to the market issue...//
The inflation report just released by the United States has caused another bloody storm in the financial market.
Thursday (October 13) U.S. stock Before the market opened, the latest data released by the U.S. Department of Labor showed that the U.S. consumer price index (CPI) rose 0.4% month-on-month, higher than 0.1% in August and 0.2% expected by market expectations.
This brought the data to an 8.2% year-on-year increase, down just 0.1 percentage point from August, stronger than the previous economists' expectations of 8.1%, and is above 8% for the seventh consecutive month, a reading more than four times higher than the Fed's 42% inflation target. In terms of
sub-item data, food prices unexpectedly rose by 0.8% month-on-month and 11.2% year-on-year; while in terms of energy, it is still amazing. Even if it fell by 2.1% month-on-month, the year-on-year increase still reached 19.8%, among which the price of fuel oil (Fuel oil) rose by 58.1% year-on-year.
Energy service prices rose 19.8% year-on-year, with electricity prices rising 15.5% and utility (pipeline) gas service prices rising 33.1%.
core CPI, which eliminates unstable factors such as fuel and food, increased by 0.6% month-on-month, and increased by 46.6% year-on-year. then beat the high in the past 40 years, which was higher than the previous market expectations of 0.5% and 6.5%, respectively, indicating that the prices of energy and food are continuing to put pressure on other categories.
Among them, the price of new cars rose by 9.4% year-on-year, second-hand cars rose by 7.2%, and transportation services rose by 14.6%, both outperforming core inflation.
, which also accounts for nearly one-third of the CPI basket, housing prices rose by 6.6%, consistent with the core inflation rate. Previous articles by Cailianshe mentioned that housing prices are more sticky than other categories, which may form "extraordinary and huge" resistance to the decline in inflation.
100 basis points rate hike returns to market issues
After the data was released, the financial market fluctuated violently. The yields of US dollar and US bonds are rising rapidly, while crude oil, gold, non-US currencies, etc. have dropped significantly. Among them, "the anchor of global asset pricing" - 0-year US Treasury yield once exceeded 4%.
Market analysis said that the potential inflation pressure in the United States continued to rise in September, strengthening the Fed's expectation that the fourth rate hike of 75 basis points will be raised next month. CME’s “Federal Watch” tool shows that the market has fully digested the bank’s expectation of a 75 basis point rate hike in November, and there is even a 7.6% chance of a 100 basis point rate hike.
Back to the data, the Russian-Ukrainian conflict brings upward risks to food prices. In addition, potential inflation is largely driven by rising rental costs, and part of the inflation pressure also comes from tight labor markets. The high inflation rate and tight labor market make the Fed have to and able to maintain a positive monetary policy stance for a period of time.
There are also comments pointing out that is the last CPI report before the US midterm elections. is sure that Republican people will hit this hard; is a disaster for Democrats.
/// US stocks closed: CPI bursting led to a wild roller coaster market. The three major indexes closed up more than 2% //
Facing the impact of US CPI data exceeding expectations on Thursday, the three major indexes of opened and fell rapidly, and Nasdaq fell more than 3% at one point. What surprised the market was that the US stock market then launched a violent round of rises, and finally the three major indexes closed with rising by and all increased by more than 2%.
(Three major index minute line charts, source: TradingView)
According to statistics from research institution Bespoke, in the history of S&P 500 index , has seen the wonder of "opening down 2% but closing up 2%", including only 5 times today.
All parties have also given different interpretations of the reasons for today's wild fluctuations in the stock market.Danny Kirsch, head of in Paijie Investment options, believes that is a combination of short-selling and short-selling . Thursday's CPI data was an event that was fully hedged by , so after the expected event occurred, investors sold the hedging targets at hand, which led to the market rise.
According to data previously provided by Sundial Capital Research, the largest companies in the options market bought more than $10 billion in stocks put options last week, which is also the highest record for this group. So after the CPI data was released on Thursday, these targets actually played a hedge role, and seemed to push investors to cash out these positions.
In addition, from the perspective of technical traders, the S&P 500 index is near the 200-week line after the sharp drop in the past two months, and in the past 2016 and 2018, this long-term trend line just supported the decline of US stocks at that time.
(Source: TradingView)
Of course, this matter that CPI exceeded expectations obviously cannot be regarded as a favorable point. Nick Timiraos, a financial reporter who is known as the "Federal Mouth", also said in the report that this inflation data is likely to allow the Fed to continue raising interest rates at a pace of 75 basis points in November, and at the same time, the expected time point for the subsequent slowdown in the rate hike rhythm is also at the risk of delaying.
Market dynamics
As of the close, the S&P 500 rose 2.60% to 3669.91 points; Nasdaq index rose 2.23% to 10649.15 points; Dow Jones index rose 2.83% to 30038.72 points.
technology blue chip stock rose sharply, among which Apple rose 3.36%, Tesla rose 2.06%, Amazon fell 0.33%, Google A rose 1.54%, Microsoft rose 3.76%, and Nvidia rose 4%.
Energy and aviation and other economies restarted concept stock also strengthened collectively, with ExxonMobil rising 3.49%, Chevron rising 4.85%, American Airlines rising 2.76%, Royal Caribbean Cruises falling 1.34%, Norwegian Cruises falling 0.23%, and Boeing rising 1.52%.
Chinese stocks listed in the United States on Thursday were weaker than market , and Nasdaq China Golden Dragon Index closed down 0.68%.
This article is from Cailianshe
