The US CPI data for June was slightly lower than expected, the market rose as expected, and the expectation of interest rate hike still exists

The US CPI rose 3% year-on-year in June, slightly lower than the expected 3.1%. Although it was a little bit higher than expected, it did not affect the stock market and exchange rate. However, the core CPI rose 4.8% year-on-year, which is still quite high, and the financial and service CPI is still a long way from reaching the target of 2%. It is expected that there will be 1-2 more interest rate hikes in the future, because the US CPI data may rise again and fluctuate between 3% and 4%.

The gradual rise in crude oil prices will also add pressure to the US CPI. Starting in July, the US CPI data may become anxious. Therefore, the US dollar index may fall in the short term due to the CPI exceeding expectations, but this situation is difficult to sustain. In particular, starting from July, the US dollar index may gradually strengthen. These situations are within the expectations of the Federal Reserve, otherwise they would not have estimated the CPI in June to be 3.1%. According to the high base last year, everyone knows that the US CPI in June will be close to 3%. Therefore, the current decline in the US dollar index and the sharp rise in the Nasdaq are both performances expected by Wall Street.

However, this expected surge is not necessarily a good thing. A sudden positive is the real surge. In many cases, this surge tends to open high and go low, or it will fall back quickly within three days. This has happened many times. This is why the Federal Reserve has been saying recently that it will continue to raise interest rates 1-2 times later and it is impossible to cut interest rates this year. Because the high base of CPI data has no longer existed since July, the subsequent data will not be as optimistic as before. It is necessary to raise interest rates to curb inflation, especially core inflation. Therefore, it is more dangerous to chase high US stocks today, because the gains are all within expectations and there are not many surprises. We can also observe whether history will repeat itself, that is, it will fall back after rising on the same day, or it will not only fall back to today's high opening gains in the next three days, but may also fall further. These are all worthy of our attention.