The Fed's inflation rainy indicator continued to hit a new high of more than 40 years in June. Data released by the Bureau of Economic Analysis (BEA) of the U.S. Department of Commerce on the 30th local time showed that driven by the general rise in goods and services, the U.S. p

The Fed's inflation rainy indicator continued to hit a new high of more than 40 years in June.

Data released by the Bureau of Economic Analysis (BEA) of the U.S. Department of Commerce on the 30th local time showed that driven by the general rise in goods and services, the U.S. personal consumption expenditure (PCE) price index in June soared 6.8% year-on-year, up 0.3 percentage points from the previous month, hitting a new high since January 1982. Among them, energy prices rose year-on-year 43.5% , and food prices rose year-on-year 11.2% . In the month, the overall PCE price index rose by 1.0% month-on-month, with the previous value of 0.6%, the largest increase since February 1981.

After excluding the volatile food and energy prices, the US core PCE price index in June rose 4.8% year-on-year, up 0.1 percentage point from the previous value, but is still lower than the high increase of 5.3% in February this year. In that month, the core PCE price index rose by 0.6% month-on-month, doubling the growth rate from the previous month.

Traditionally, given the instability of food and energy prices, core PCE data is the Fed's most favored indicator of inflation. However, Fed Chairman Powell admitted on Wednesday (27th) that policy makers need to pay attention to these two types of inflation, given the particularity of the current environment.

The three major stock indexes all hit the largest single-month increase since 2020

Recently, the economic slowdown may "force back" the Fed's aggressive interest rate hike plan boosted, and the overall performance of the financial report quarter was better than expected, which boosted major stock indexes rebounded from lows this year.

html In July, the cumulative increase of the S&P 500 and Nasdaq Index reached 9.1% and 12.4% respectively, while the Dow Jones Industrial Average rose 6.7% during the same period. The three major stock indexes all recorded the largest single-month increase of the year that month.

Baird Investment strategy analyst Ross Mayfield explained that sluggish investor sentiment and bearish positions provide capital for the stock index rebound, but the more important picture is a subtle shift in inflation and inflation expectations, "which leads to a shift in market expectations about the Fed's policy path." In addition, the corporate profit resilience disclosed in the financial report season also provides support to the stock market in the short term. Statistics from

FactSet show that more than half of the S&P 500 companies have announced their financial reports, of which 72% of the companies' profits exceeded expectations.

However, many analysts are still cautious about the momentum of the stock market rebound. Brian O’Reilly, head of market strategy at Mediolanum International Funds, warned that the rebound momentum in the stock market will fade, “We are still facing a rather dangerous economic environment.” He added that there is little sign that inflation is peaking.

Inflation is eroding income expenditure

Data shows that under the influence of soaring prices, the US personal disposable income (DPI) rose 0.6% month-on-month in June, and personal consumption expenditure (PCE) rose 1.1% month-on-month. In that month, the actual disposable personal income after inflation adjusted fell by 0.3%, and real consumer spending increased by 0.1%. Among them, commodity expenditure increased by 0.1%, and service expenditure increased by 0.1%.

In the month, the personal savings rate (i.e., the percentage of personal savings as personal disposable income) fell by 0.4 percentage points to 5.1%. According to the sharing of

, in commodity spending, the growth of durable goods (led by automobiles and parts) is offset to a certain extent by the decrease in non-durable goods (led by food and beverages). In terms of service expenditure, the main contributors are other service expenditures in health care, food services and accommodation, and international tourism.

Data released by the US Department of Commerce on the 28th showed that the US real GDP (GDP) in the second quarter of 2022 fell by 0.9% month-on-month on an annualized basis, far less than the market expected growth of 0.3%, shrinking for the second consecutive quarter - that is, the commonly defined "technical recession". In the first quarter of this year, the annualized final value of the US real GDP shrank by 1.6%.

Bank: Don't be too optimistic about the Fed's dove

Bank Securities' American economist Michael Gapen warned: "The Fed may react slowly to the recession, and we think it's too early for the market to have optimistic expectations of the Fed's turn to doves."

Gelpeng believes that although the U.S. economy is in a technical recession, it is "not in a real recession yet". "Strong recruitment and shrinking GDP means that productivity will inevitably collapse and the labor market should slow down soon.”

In June, the US non-farm employment increased by 372,000, which was significantly better than market expectations. The unemployment rate remained at a low of 3.6% for four consecutive months. On August 5, the United States will release its July non-farm employment report.

At present, the FedWatch of the Chicago Mercantile Exchange Tool) shows that traders expect that the probability of announcing a 75 basis point interest rate hike after the Federal Reserve's monetary policy meeting in late September fell to 30%, and the probability of a 50 basis point interest rate hike is 70%.

On Wednesday (27th), local time, the Federal Reserve announced another hike rate hike of 75 basis points, raising the target range of the federal funds rate to 2.25-2.50%. Federal Reserve Chairman Powell said at a press conference that the current inflation rate is too high, and the uncertainty of the economy has increased significantly compared with the past, but has not fallen into recession. He reiterated that the strength of the future policy depends on the data and hinted that the pace of interest rate hikes may slow down.