Let's first look at the expectations for CPI tonight. The market expects that the broad CPI will remain at 0.2% month-on-month in October (the same as last month), and is expected to rise by 2.6% year-on-year (2.4% last month). Excluding the volatile food and energy factors, the core CPI is expected to increase by 0.3% month-on-month (the same as last month), and remain at 3.3% year-on-year for the third consecutive month. Both the Federal Reserve and the financial market have already expected the rebound in inflation. As Powell said at the November FOMC press conference, the Federal Reserve has deleted the "confidence" statement about inflation falling back to 2% quickly. Therefore, the October CPI data will not be a surprise factor in the Federal Reserve's December interest rate decision. Although the market may experience short-term fluctuations due to data higher or lower than expected, this will not change the long-term logic of various assets.
The main factors for the increase in inflation this month may be concentrated in the automotive industry, while the risk of long-term inflation may come from tariff policies. Although the supply and demand of the used car market did not change much in October, the unfavorable seasonal adjustment factors have kept used car inflation high since the fall of this year. Adjusted used car inflation is expected to rise by 1.5% (0.3% last month). In addition, the market is also worried about the imposition of tariffs by the Trump administration after taking office and the increase in container freight rates between Asia and North America. Rising freight rates and tariffs on Chinese goods will increase corporate costs, which may be transmitted to consumers through compressed profit margins or price increases, that is, triggering imported inflation.
However, at least we may not be too pessimistic about the CPI data for the fourth quarter. At this stage, the decline in inflation has obviously encountered resistance, but there is no room for a sharp rebound. The current inventory of automobiles and various commodities is very high. Due to the expectation of tariffs and the strikes some time ago, companies rushed to stock up. As the year-end holidays approach, companies may be forced to cut prices and discounts to clear these inventories, especially if demand is lower than expected. In addition, the recent strong position of the US dollar exchange rate will also lower the prices of imported goods to a certain extent.
After talking about inflation, we summarize several points of view: First,#降息 It does not mean that the US dollar index will definitely weaken. If the economic fundamentals are strong and non-US economies are weak, the US dollar index may still rise during the interest rate cut cycle, similar to the situation in Reagan's first term. Secondly, interest rate cuts do not mean that US bond prices will inevitably rise. The Treasury market often likes to run ahead, and bond prices may have responded before interest rates change. In particular, US bond yields are closely related to bond supply and demand. The market generally expects that Trump will push up the deficit after taking office, and there is insufficient confidence in the "efficiency department" of Musk and others to cut spending. The government deficit is likely to be solved by over-issuing treasury bonds. Therefore, the view of shorting 10-year US bonds has been very popular recently. Third, a strong dollar does not necessarily mean a decline in risky assets, especially for US stocks. If the strong dollar is accompanied by strong economic fundamentals, then US stocks will continue to rise. Finally, inflation rebound is indeed a problem with greater potential risks at present. Especially in the context of Trump's victory, if the Fed suspends interest rate cuts, it may disrupt the current rise in risky assets. For US stocks, it can still rely on fundamentals, but the impact on liquid assets such as BTC may be a little greater.
BTC was blocked at 9w, and there may indeed be a short-term risk-averse factor of CPI. If inflation tonight is indeed slightly higher than expected, although it is not ruled out that sentiment will bring a small wave of selling in the short term. However, given that the Federal Reserve has already emphasized the possibility of repeated inflation, this data alone will not have a decisive impact on the interest rate decision in December. After all, the trend of BTC has been formed, and the logic of rising will not change easily. The key is still the quality of the economy and the sustainability of long-term loose monetary policy.
