In the early morning Fed released the minutes of the monetary meeting, and the minutes of the Chinese and US Federal Reserves sent hawkish signals as scheduled, in line with our expectations for the Fed's policy path yesterday. However, gold and the US dollar have completed short-term repairs before the minutes, which caused gold to rise and the US dollar to fall after the minutes.
We will not repeat the interpretation of the meeting minutes. If you need it, you can read yesterday's article "Minutes of the Federal Reserve Meeting and Policy Paths! 》. Next we need to pay attention to the annual rate of the US core PCE price index in April and the University of Michigan final value data in May.
US April core PCE price index
1. What is PCE?
PCE is the abbreviation of the Personal Consumption Expenditure Index (CTPIPCE), is a key indicator for measuring the inflation of private consumption in the United States. was first launched by the Economic Analysis Bureau of the U.S. Department of Commerce. was adopted by the Federal Open Market Committee (FOMC), a decision-making body of the Federal Reserve, as a major indicator for measuring inflation of .
2. What is the relationship between PCE and Fed policies?
In January 2012, the Federal Reserve set the annual increase of core PCE by 2% as the long-term inflation target, and has since announced that the Federal Reserve has also had a clear inflation target. If the annual rate of core PCE increases by more than 2%, the Federal Reserve will tighten monetary policy, which is beneficial to the US dollar. What is the difference between
3.CPI and PCE data?
Consumer Price Index (CPI) is based on fixed goods, while PCE is based on personal consumption, and is used to find the average increase in the prices of all personal consumer goods, which can be reflected in consumers purchasing alternative products due to price changes.
Therefore, PCE is considered to be a relatively comprehensive and stable indicator for measuring US inflation. attracted the attention of the Federal Reserve, thus setting the data on PCE as the long-term inflation target.
(PCE changes from 2004 to 2022)
Since the outbreak of the global COVID-19 outbreak in March 2020, the Federal Reserve has released a series of loose policies to save the economy. The loose monetary policy will inevitably lead to the depreciation of the US dollar and exacerbate its own inflation. Therefore, inflation soared to above 5% for two years, setting a new high in nearly 40 years.
and the performance of various types of assets in the Federal Reserve's tightening cycle published on Tuesday! The inflation view mentioned in " is consistent. Appropriate inflation has a promoting effect on the social economy, and hyperinflation has a inhibitory effect on the economy. Therefore, the Federal Reserve must control its own inflation when the economy is strong.
The Fed's best tool is to adjust interest rates, so to control inflation, you must raise interest rates . , inflation fell due to Fed rate hike , which is closely related to gold, US dollar, US bond and real interest rates.
First of all, the relationship between gold and the US dollar, US bonds and real interest rates is negatively correlated, So during the Fed's tightening and easing period, the US dollar and real interest rates will rise, , and gold, as the leader of the safe-haven asset, cannot be immune to it!
US dollar rise represents a strong US economy, and has attracted global investors to sell gold, bonds, stocks, etc. to exchange for US dollars. The basic value of US dollars will inevitably rise.
The rise in real interest rate is closely related to its calculation method. US Treasury yield-inflation=real interest rate, So the decline in inflation confirms that the rise in real interest rate in the United States will also prompt investors to believe that the economic situation is good and they are unwilling to hold gold, stocks and bonds.
This has caused the recent decline in gold, US stock and bonds! So from the general environment, it is inevitable to bear gold during the Fed's tightening and easing period, and the decline in inflation will also intensify the selling sentiment of gold.
But tomorrow night (Friday 20:30) the market will announce the April PCE inflation data. Like the Federal Reserve's interest rate hike this month and the balance sheet reduction decision, it will have little impact on this inflation data. I think the decline in inflation is only a slight decline.
The rate of inflation decline is lower than or higher than the psychological expectations of Fed officials, it will in disguisely intensify the views of Fed officials on the next tightening path. Therefore, no matter what the published value of this data is, it will have a negative gold effect!
Regarding the final value data of the University of Michigan Consumer Confidence Index in the United States in May, we will put it in the article tomorrow morning, and we will make specific expectations for PCE inflation data! bonds, actual interest rates... will be published one after another.
is basically lagging against the impact of goods. When the market generates expectations, it will promote the operation of commodity prices. On the contrary, the arrival of facts will cause market sentiment to reverse!
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-