Federal Interest Rate Resolution Review
7 Fed Interest Rate Resolution was announced, and all decision makers supported interest rate hikes three codes, which meets the expectations of most people in the market. The Fed's statement mentioned that spending and production indicators have weakened. Despite this, employment growth was strong and unemployment remained low. inflation remains high, war and related events are putting additional upward pressure on inflation and putting pressure on global economic activities, and the committee is paying close attention to inflation risks.
Subsequently, Federal Reserve Chairman Powell sent a dovish signal at a press conference. He mentioned that he was not ruled out that another sharp rate hike in September was not ruled out, and it has not yet decided when to start slowing down the rate hike. The Federal Reserve will have more inflation data in the future and use this to evaluate the policy direction. Whether inflation is on the way to drop to 2%, which will determine how the policy position is set.
Recent data changes
Labor force-Occupational data from the United States, non-farm workers increased by 528,000 in July, significantly higher than the market expectations of 250,000. Although non-farm workers decreased from the previous month, only 315,000, it was still higher than the market expectations of 300,000. The unemployment rate recorded 3.5% in July and 3.7% in August. Judging from this data, the labor market is still in a state of strong growth, as mentioned in the previous meeting of the Federal Reserve, and there are no obvious signs of recession.
Inflation- The US CPI recorded 8.3% year-on-year in August, with a market expectation of 8.1%, with a previous value of 8.5%; core CPI recorded 6.3% year-on-year, with a market expectation of 6.1%, with a previous value of 5.9%. Judging from the details, the residential sub-item rose sharply, while the energy sub-item fell sharply. The price changes of residential properties are relatively long-term, so it takes more time to fall back, which is also a factor that has a major market response after the data is released.
Observation of CME FedWatch Tool
Currently, the probability of raising interest rates is 20% from CME FedWatch Tool CPI data was released last week, and after the peak, it showed a decreasing trend. The probability of raising interest rates by three codes gradually rose to 80% with the decrease in the probability of raising interest rates by four codes. Judging from the current expectations, the three codes are almost a foregone conclusion. What will happen if
raises three or four codes?
Previously, the market increased the expectations of the Federal Reserve's interest rate hike for four codes due to the release of US CPI data. Although high inflation has caused the Federal Reserve to raise interest rates in confrontation, as the market returns to rationality, it is believed that the Federal Reserve will not raise interest rates for four codes this week, and various types of assets have also begun to show a pullback trend. Therefore, if the interest rate hikes three codes this week as expected, there will be a slight negative trend of US dollar and positive products. On the contrary, if the market falls below the market glasses and raises interest rates for four numbers, there will be significant profits and negative US dollar and various US dollar-denominated commodities.
Red Lion Zhifu: Zheng Hong
