According to Deep Tide TechFlow news on December 13, as reported by Jin Ten, Stephen Juneau, Chief Economist at Bank of America, released a latest report warning that investors ignoring inflation data may face liquidation risks in 2025. The latest data shows that the November CPI increased by 2.7% year-on-year and rose by 0.3% month-on-month, up 0.1 percentage points from October; the November PPI increased by 0.4% month-on-month, significantly exceeding the market expectation of 0.2%.
Federal funds futures indicate a 98% probability that the Federal Reserve will cut interest rates by 25 basis points next week. However, Rick Rieder, CIO of BlackRock Global Fixed Income, Greg Daco, Chief Economist at EY, and Oren Klachkin, an economist at Nationwide, all expect that due to the potential impact of Trump’s new policies, the Fed may pause its rate-cutting process in early 2025.
The market needs to be wary of three major risks: higher tariff policies, deficit financing tax cut plans, and tightening immigration policies. These factors may lead to a sustained high core PCE inflation rate in the next two years. Daco particularly pointed out that although the likelihood of a rate cut next week is close to a 'coin toss probability', the pace of subsequent rate cuts will significantly slow down, and policymakers will remain highly vigilant regarding the new government policies.
