Overnight, Bitcoin continued to consolidate above 30,000. It was as stable as an old dog, as stable as a stablecoin.
The entire market is waiting for the Federal Reserve, but the Federal Reserve is waiting for employment and inflation. It is like all the girls in the class want to date Awei, but Awei is waiting for Huahua and Xiaocui.
The Fed's July interest rate meeting will be held on the 25th and 26th. In June, the Fed suddenly stopped raising interest rates, saying that the policy effect has a lag and it needs to slow down and see the situation. However, it is also necessary to manage market expectations and maintain the strength of the US dollar. Therefore, from Powell to the Fed directors, they jump out to make public speeches every now and then. The meaning is roughly the same, that is, the US employment is too strong, the economy is too good, and although inflation has been declining, it is still too high and far from the long-term management target. We will have to raise interest rates at least twice before the end of the year, and it is appropriate to resume raising interest rates in July.
The Federal Reserve is very adept at using verbal communication to manage expectations.
The slap in the face came quickly. The employment data on the 7th reversed, with new jobs lower than expected and hitting the lowest record in six months. The employment growth rate hit the brakes after exceeding expectations for 14 consecutive months.
What is Powell waiting for? He is waiting for data, but also waiting for a space to maneuver.
He used the strategy of "delay" to exchange time for space.
Raising interest rates and shrinking the balance sheet is fighting inflation and also fighting asset prices. The bosses haven't gotten on the bus yet, so the bus must reverse to pick up the guests.
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The market is full of bloody deleveraging, and the outside world is a hell on earth of arms destocking. However, the US GDP is growing steadily, and not only does the US population not look old, but GDP growth and falling inflation are a sign of a full recovery.
After getting on the train, you still have to eat meat. This period is the most delicate moment. Powell must be cautious. On the one hand, targeted easing is needed to allow bosses to have enough bullets to buy at the bottom. On the other hand, expectations must be managed, and the tight and hard dollar situation must be maintained to maximize the purchasing power of the funds for buying at the bottom. This is the time that tests the trading level the most, and Powell must demonstrate his ability to steer the world's strongest central bank.
Sailing on the sea depends on the helmsman, and everything grows on the sun. The seedlings that are dying of thirst in the dry land all over the world are eagerly waiting for the Federal Reserve to reopen the floodgates of US dollars.
Powell gritted his teeth and refused to give in. He had to wait until his bosses had finished their layout. Institutions entered the market one after another, BlackRock personally participated, and Yellen's visit went smoothly... The day when the mask of high inflation was torn off was getting closer and closer.
Overnight on the 12th, the U.S. BLS (Bureau of Labor Statistics) released the unadjusted CPI data for June, with an annual growth rate (inflation rate) of 3%, lower than the expected value of 3.1%, and significantly lower than the CPI growth rate of 4.0% in May.
Unexpected decrease.
If it falls further, it will fall to around 2%, the Fed’s long-term inflation management range. The justification for high inflation will no longer exist.
In fact, the inflation rate is just a smokescreen. Most people simply lack the intuitive understanding of second-order rates of change. Just look at the CPI data from March to June 2022, and you will see why the inflation rate has been falling again and again: from 5 to 10, it increased by 100%, from 5 to 9, it increased by 80%, and from 9 to 10, it increased by 11%. Prices before June had already risen last year. After June, prices peaked and could not rise anymore. Didn’t this year’s inflation rate turn around in June?
The messenger of truth suddenly becomes a tool to deceive people.
When the US CPI fell sharply, we knew that there was little room for Powell's bosses to maneuver. The clock began to count down.
So, be quick. If you are slow, only soup or even bones will be left.