Later this week, another important economic data will be released, the July retail monthly rate, and at the same time, there will be initial jobless claims!
This week's initial jobless claims should not fluctuate too much, because for the Federal Reserve, it is impossible to let the market anticipate the possibility of an economic recession, otherwise the market will be in a stampede panic.
July retail monthly rate, previous value 0.00% expected 0.3%
This data is an economic data showing the current demand side of the US economy. It is expected to be higher than the previous value. If the published data meets expectations, it will be good for the US economy and at the same time strengthen the probability of a 25 basis point interest rate cut.
Since the previous CPI has been effectively reduced, and the detailed CPI data shows that the prices of many core items have fallen, only housing costs have brought a monthly rate rebound. If today's retail monthly rate meets expectations, it will show the stability and health of the current US economy. The reason for the decline in inflation comes from the reduction in prices. At the same time, the demand side, that is, the consumption of the people, has not been reduced but activated. This is a model of benign economic operation.
As for market game, it is no longer a question of whether to cut interest rates, but how much to cut interest rates. The market prefers a 50 basis point rate cut, but this is also a double-edged sword.
A 50 basis point rate cut requires the market to show a certain possibility of a rapid economic slowdown, which can give the Fed sufficient reason to cut interest rates by 50 basis points for the first time. However, once the probability of a 50 basis point rate cut increases, if some subsequent data fall beyond expectations, it may trigger the possibility of an economic recession again.
At the same time, a 50 basis point rate cut is no longer a defensive rate cut, and it is also a bit of a slap in the face of the Fed's economic control ability. Personally, I expect that a 25 basis point rate cut is already a good expectation.
Let's eat and wait for the data!
