The market has fluctuated greatly recently. The core point is still the turbulence caused by interest rate hikes. After the CPI exceeded expectations in August, expectations of recent interest rate hikes continued to rise, which led to a continuous rise in the US dollar index and US bond yields. The stock market was greatly suppressed.
Judging from the latest CME interest rate hike expectations, the final interest rate for this round of interest rate hikes has already risen to 4.5-4.75%. Next this year, 75 BPs will be raised this week, 75 BPs will be raised in November, 50 BPs will be raised in December. The interest rate will have to be 4.25-4.5% by the end of the year. There will also be a 25 BP rate hike in March next year. Expectations for interest rate hikes are quite adequate.
So the core point is how will US inflation evolve in the future?
In response, the counselor believes that the core CPI for August exceeded expectations. On the one hand, it is due to rent stickiness, and on the other hand, due to the low base in August last year, it is possible that the CPI decline less in September will continue, because September last year was also a low base. In the fourth quarter, inflation will fall at an accelerated pace due to the base effect. This is also in line with the inflation forecast trend recently announced by the New York Federal Reserve. One-year inflation is expected to fall below 6% by the end of the year.
Looking ahead, the decline in inflation is basically certain. The core points are as follows:
1. Crude oil prices have continued to fall recently, and as the mother of commodities, a fall in crude oil prices will lead to a decline in commodity inflation, and at the same time a decline in service sector inflation through transmission such as electricity;
2. Judging from forward-looking indicators, cash...