Can the CPI released at 8:30 tonight help complete the task that the non-farm data failed to accomplish?
Markets are bracing for the first rate cut from the Federal Reserve. At the Jackson Hole conference, Fed Chairman Powell indirectly previewed the rate cut in the early hours of September 19 and stressed the importance of the labor market in the current decision-making process. The mixed job market data released last week further confirmed the rate cut. However, the non-farm payrolls data last Friday also heightened market concerns about the magnitude of the expected economic slowdown, leading to a negative reaction in most stock indices.
Before the Fed entered its usual "quiet period," several Fed officials spoke on Friday, essentially confirming the open secret of a rate cut and expressing support for the first and usually most difficult rate cut in this round of interest rate cycle. However, most officials avoided publicly expressing support for a 50 basis point rate cut.
The August CPI inflation report will be released at 8:30 p.m. Beijing time on Wednesday.
This week, the market's focus turns to inflation data. The August CPI inflation report will be released at 8:30 pm Beijing time on Wednesday. Powell was very direct in his assessment of inflation at the Jackson Hole meeting. He noted that inflation is now closer to the Fed's target and "upside risks to inflation have subsided." As a result, the importance of inflation data has declined, but the report still has significant market influence.
Interestingly, recent inflation-related information has been mixed. Last week’s ISM services and PMI price components delivered upside surprises, suggesting inflation may be heading back higher. Likewise, the University of Michigan consumer sentiment survey in mid-August showed 1-year expected inflation at 2.9%.
US CPI forecast for August
If CPI is higher than expected
Inflation concerns intensify: Higher CPI data may trigger market concerns about rising inflation. Increase the probability of a 25bp rate cut, achieve a preventive rate cut, and achieve a soft landing for the economy.
If CPI is lower than expected
Easing inflationary pressure: Lower CPI data may indicate easing inflationary pressure. Increase the probability of a 50bp rate cut and start trading a recession and hard landing.
In general: It is expected to drop to 2.6% tonight. Both meeting expectations and being below 2.6% are positive, and can further stimulate the Federal Reserve to cut interest rates by 50 basis points.
Why does the global CPI have such a huge impact this time?
First of all, the market has been through a recent baptism, and it can be said that all the positive and negative factors have been exhausted. In addition, the Fed's various dovish speeches and dragging their feet have made the market even more unclear! The release of CPI data tonight will play a key turning point, which can be said to be a watershed, so that the market is no longer confused. I am also optimistic about the strong positive of CPI and a substantial increase. Let's wait and see! #美国大选如何影响加密产业？ #美国经济软着陆？ #CPI数据 #CPI年率
