After the data came out tonight, the fundamentals of the market have returned from the fake fall of consecutive new lows to a slight recovery of the bullish offensive, and are currently in a relatively certain bottoming shock trend. The seasonally adjusted CPI annual rate at the end of August was 2.5%, lower than the previous value and expectations, and the data is extremely close to the Fed's target value.
Regarding this type of data, we generally have to look at it from a macro perspective. From the current situation, if the data drops too fast, it is easy to create panic about economic weakness. Fortunately, the core CPI monthly rate rose slightly after seasonal adjustment in August, and the core CPI annual rate was in line with expectations. Through short-term recovery and cyclical easing data, the economic market's weak sentiment can be greatly relieved, which is also one of the reasons why the market is relatively stable after the data came out.
Therefore, a 25 basis point interest rate cut this month is the best choice. Evening traders predict that the probability of a 25 basis point interest rate cut this month is close to 80%. If there is no suspense, this round of the first interest rate cut cycle will end gently. Compared with the super volatility caused by no interest rate cut or a 50 basis point interest rate cut, 25 basis points is just a port for opening the liquidity pool. It will not bring a large-scale rebound trend, but there will definitely not be a panic-level plunge.
With the mild landing of market risks, the official reversal of the market will also be extended. Technically, the decline of 52,500 points in the early stage will be difficult to hit another low point close to this point without a new low in the short term, but another short-term decline of 1,000 points is a high probability trend. The leveraged market has recently revived, and the contract position has increased significantly. In a word, the stubborn leeks have not been scared yet.
