The June US PCE inflation index was released, showing a subtle trend: both an increase and a decrease, which is good for US stocks and expectations of interest rate cuts. The specific situation is as follows:
This month, the overall US PCE index in June fell from 2.6% last month to 2.5%, indicating that inflation is still on a downward trend, which is undoubtedly a positive signal for the Fed to consider cutting interest rates. However, its decline was slightly lower than the market's expectation of 2.4%, showing that the US economy is still strong.
Combined with the unexpected second-quarter GDP data released yesterday, the current US economy is in good condition and inflation spending is also strong, which shows that the US economy is still strong, thus alleviating market concerns about economic recession. Affected by this, the Nasdaq index opened higher yesterday, with an increase of nearly 0.8%.
Further observation shows that the three-month smoothed PCE index in the United States has fallen to 2.3%, which is close to the 2% target set by the Federal Reserve. This makes the possibility of a rate cut in September almost a foregone conclusion, while the probability of a rate cut in July is greatly reduced.
For the Federal Reserve's interest rate meeting to be held at the end of July, the market generally predicts that it is unlikely to cut interest rates. But this does not mean that this meeting lacks highlights. On the contrary, I personally think that this meeting will be the most important one this year, because the attitude of the Federal Reserve will directly determine whether the interest rate cut will start or not, and the market is quite divided on this. In July last year, the market reacted flatly after the Federal Reserve stopped raising interest rates, and this time may be the same.
So, what will the Federal Reserve say? Let us look forward to the Federal Reserve's July interest rate meeting in the early morning of July 31
