At 20:30 Beijing time on October 13, the United States released the CPI data for September, which exceeded market expectations. Data shows that the September CPI rose 8.2% year-on-year, estimated at 8.1%, and the previous value was 8.3%. The United States September CPI rose 0.4% month-on-month, estimated at 0.2%, and the previous value was 0.1%. After the inflation data of
was released, US stock futures straight line plunged , and Nasdaq futures decline expanded to 3%; US dollar index instantly violently rose by about 80 points to 113.56; offshore RMB fell sharply against the US dollar, a drop of 0.9%; the exchange rate of the Japanese yen against the US dollar fell below 147 yen for a time, setting a new low since August 1998. FTSE A50 China Index Futures fell 1.22%.
US stocks opened and plummeted, with the Nasdaq falling 2.74%, S&P 500 index falling 2.06%; large technology stocks generally fell, Nvidia fell more than 5%, Amazon and Tesla fell more than 4%, Netflix fell more than 3%, Alphabet and Apple fell nearly 3%. Nasdaq China Golden Dragon Index fell by more than 5%.
But just now, Biden issued a statement saying that today's CPI report shows that we have made some progress in fighting inflation, although there is more work to be done. Fighting against inflation remains the top priority. Subsequently, the US stock market rebounded to a certain extent.
There is no moment in history, and global investors pay so much attention to the US CPI data as today. Because this data directly determines the strength of the next rate hike of the Federal Reserve . The rate hike greatly affects the trend of the US stock market and the trend of the US dollar, and also affects whether the US economy will fall into recession, and then passes this series of risks to various countries around the world.
This time the CPI exceeded expectations. What is the expectation of the Fed's rate hike in the later period? When will the road to hikes in Mianmian interest rates be the end?
The US CPI exceeded expectations again in September,
US stocks plunged, and the US dollar index soared
Beijing time at 20:30 on October 13, the US announced the September CPI data. Data shows that the US CPI rose 8.2% year-on-year, estimated at 8.1%, and the previous value was 8.3%. The US CPI rose 0.4% month-on-month, estimated at 0.2%, and the previous value was 0.1%. The core CPI, excluding food and energy prices, rose 6.6% year-on-year, expected 6.50% and the previous value of 6.30%. After the inflation data of
was released, US stock futures plunged straight, and the decline of Nasdaq futures expanded to 3%; the US dollar index suddenly violently rose by about 80 points, and is now at 113.56; the offshore RMB fell sharply against the US dollar, a drop of 0.9%; the exchange rate of the Japanese yen against the US dollar fell below 147 yen for a time, setting a new low since August 1998.
US stocks plummeted at the opening. The Nasdaq fell 2.74%, the S&P 500 fell 2.06%; large technology stocks fell generally, Nvidia fell more than 5%, Amazon and Tesla fell more than 4%, Netflix fell more than 3%, and Alphabet and Apple fell nearly 3%. Nasdaq China Golden Dragon Index fell by more than 5%, Bilibili fell by more than 11%, Xiaopeng Motors fell by nearly 10%, NIO , Boss Direct Recruitment , iQiyi, Shell , Baidu fell by more than 6%, Alibaba , NetEase, Pinduoduo, JD fell by more than 5%.
European stocks have widened their declines, French CAC40 index fell 2%, German DAX index fell 1.21%, UK FTSE 100 index fell 1.47%, and Italy FTSE MIB index fell 1.24%.
We see that the September CPI year-on-year and month-on-month data released by the United States today exceeded expectations again. In particular, the core CPI data set a record high in 40 years. This means that due to the continued Fed rate hikes this year, the inflation risks in the United States have not been effectively exposed, and expectations for interest rate hikes in the later period are still high.
It is worth mentioning that in addition to CPI, two other data that have attracted much attention from the market: September non-farm employment data and PPI data both exceeded market expectations.
Non-farm employment data released last Friday showed that non-farm jobs in the United States increased by 263,000 in September, higher than the 250,000 commonly predicted by economists. The U.S. unemployment rate in September unexpectedly fell to 3.5%, lower than the previous and expected value of 3.7%.
PPI data released yesterday showed that the US PPI rose 8.5% year-on-year in September, higher than the market expectations of 8.4%; rose 0.4% month-on-month, higher than the market expectations of 0.2%, and reversed the 0.1% decline in August.
US stocks are having trouble tonight
According to the schedule, the Federal Reserve will announce the new interest rate results on November 2. After the release of beyond expectations of non-farm employment data and PPI data, the market generally expects to raise interest rates by 75 basis points in November. Today, CPI announced that it further increased expectations for a US dollar interest rate hike.
A recent research report released by Barclays shows that at least in the past decade, no economic indicators have shown a high negative correlation with market trends like today's CPI. This is further confirmed by the trend of US stocks on the day of the release of
CPI data. Just last month, when the Federal Reserve released CPI data that exceeded expectations, the S&P 500 fell 4.32%, and the Nasdaq plummeted 5.16%.
value line counts the trend of US stocks after the first 8 CPI data released this year, and found that S&P and Nasdaq closed down 7 times and closed up 1 time. Among the seven declines, 6 CPI exceeded expectations, and 1 was the same as expected; and the rise happened to be the only time that the monthly CPI data in the United States was lower than expected.
The corresponding table of the monthly CPI data of the United States and the rise and fall of US stocks:
Perhaps it is precisely because the correlation between CPI and US stock trends is getting stronger and stronger. Before the release of CPI data in September, many large investment institutions have boldly given predictions of the US stock trend tonight.
JP Morgan said:
If the CPI rises more than 8.3% year-on-year, this will be destined to be another day for US stocks to plummet by 5%;
If the CPI rises more than 8.1%-8.3%, the S&P 500 may fall between 1.5%-2%;
If the CPI rises more than 7.9%-8.0%, this may be enough to trigger a round of rebound;
If the CPI rises less than 7.9%-8.0% year-on-year, the S&P 500 may rise by 2%-3%.
Another well-known investment bank, Goldman Sachs, also gave its own predictions:
If the CPI rises more than 8.2% year-on-year, the S&P 500 is expected to fall more than 3%;
If the CPI rises more than 8%-8.2% year-on-year, the S&P 500 is expected to fall 1%-2%;
If the CPI rises more than 7.8%-7.9% year-on-year, the S&P 500 is expected to rise more than 3%.
Now, the CPI data has been released at 8.2%, and the US stock market is expected to fall between 1-2% today.
In addition to its impact on US stocks, another reason why the US CPI received special attention in September is that this is the last CPI report before the US midterm elections in November. If the performance is not good, it may have an important impact on the results of the midterm elections and in turn affect the future US economic policies.
U.S. inflation fell by half in six months?
Energy and epidemic pressure should not be underestimated
How long will the "high fever" of the US inflation continue in the future? It has always been the focus of market attention. Moody's, one of the world's three largest rating agencies, said recently that the U.S. inflation rate will drop by half within six months.
"The Consumer Price Index (CPI) will halve from the current 8% or more to nearly 4%. But the real hard part is the decline from 4% to the Fed's target value. Because this will involve inflation in the service industry, wages and labor markets must cool down," said Moody's chief economist Mark Zandi.
But in the short term, there are still many difficulties to cool down US inflation, especially the high energy prices, which have become a "sharp knife" hanging in the Biden administration's heart.
In order to lower international oil prices, the United States has released its strategic reserves of oil this year, hoping to force down oil prices. However, the war in the energy power Russia continues, and OPEC , led by Saudi , also did not buy it. On the 5th of this month, the Organization of Petroleum Exporting Countries (OPEC) and non-OPEC oil-producing countries decided to work together to reduce production by a significant reduction in production from November this year, reducing the average daily crude oil output by 2 million barrels.
US media revealed that before OPEC+ announced production cuts, White House tried to persuade Saudi Arabia to postpone its production cuts for one month, but it was rejected by Saudi Arabia. Why one month? Because the 2022 US midterm elections will be held on November 8, fluctuations in oil prices will inevitably affect the election situation of Biden's Democratic Party.
As we all know, Saudi Arabia has always been the "little brother" of the United States in Middle East . In order to convince Saudi Arabia to increase production, in July this year, Biden also lowered his mind and visited Saudi Arabia in person. Biden was somewhat embarrassed to be stung by this back stab. US media also revealed that the White House believes that Saudi Arabia's move is tantamount to "taking the team" of Russia, and Biden even warned privately that Saudi Arabia's actions "must have consequences."
In addition to energy prices, another major challenge facing inflation in the short term may be the epidemic. With the arrival of autumn and winter in the Northern Hemisphere, public indoor activities have increased. Epidemic monitoring shows that the number of infections and hospitalizations in some northern parts of the United States has begun to increase, and there are signs of intensification of the spread of the new coronavirus.
The labor shortage caused by the epidemic has become one of the direct reasons for pushing up US inflation. The Brookings Institution, an American think tank, recently released an analysis report saying that of about 16 million working-age populations affected by the new crown , 2 million to 4 million cannot work. If calculated as the intermediate value, it means that 1.8% of the US labor force cannot work.
is facing the dual pressure of energy and the epidemic. Let us wait and see whether US inflation can decline as scheduled.
Inflation is high and does not subside, When will the pace of Fed rate hikes slow down?
On October 12, the Federal Reserve released the minutes of the September monetary policy meeting. According to data, many participants stressed that "too little action may be higher than taking too many actions in suppressing inflation." "Historical experience shows that it is dangerous to end deflationary monetary policies aimed at suppressing inflation."
CME’s “FedWatch” tool shows that at present, the market’s expectations that the Fed will raise interest rates by 75 basis points to the 3.75%-4% range at its November meeting have strengthened. On October 12, the market expected that the probability of the Federal Reserve raising interest rates by 75 basis points in November was as high as 81.7%, and the probability of raising interest rates by 50 basis points was 18.3%. Just one week ago, the probability of raising interest rates by 75 and 50 basis points was 65.9% and 34.1% respectively. The Federal Reserve may continue to raise interest rates in December, and the market's expectations for the Fed's interest rate hike in December are concentrated at 50 basis points.
CICC analyst Liu Zhengning and others pointed out that it is too early to expect policy shifts. The current US labor market is still strong, and the labor supply has not improved substantially, which means that the inflation risk has not been lifted. At present, the September non-farm data is better than market expectations, which will greatly increase the probability of a 75 basis point rate hike in November.
CITIC Securities analyst Mingming pointed out that considering the Fed's forward-looking guidance rules and actual interest rate level, the expected end point of interest rate hike is about 5%, and the probability of subsequent interest rate hikes of 125 basis points is relatively high. Currently, inflation on the supply side has eased, but demand is still resilient, energy prices have limited room for decline in the future, and inflation may fall slowly this year. If there is no new impact on the supply side, the probability of the Federal Reserve stopping interest rate hikes in the first quarter of next year is high. If geopolitical conflicts further escalate, or large-scale production cuts in OPEC+ lead to a sharp rise in the price of commodity , the path to hikes in the United States will be more radical, and the uncertainty of the time when interest rate hikes will be stopped at that time will increase.
Attachment
This year's US CPI and rate hike correspondence table
This article comes from the value line
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