According to data released by the United States Bureau of Labor Statistics, the United States consumer price index (CPI) rose 2.9% year-on-year in July, falling for the fourth consecutive month, falling below 3% for the first time in nearly three years, the Federal Reserve has made progress on inflation, and the year-on-year growth rate of inflation in goods excluding food and energy has been in the negative range this year, but service inflation still maintains a high growth rate of 4.9%.
The inflation is basically in line with expectations, the market reaction is not large, or think that the probability of the Fed cutting interest rates in September is 100%, but the magnitude of interest rate cuts is more rational, the probability of an expected interest rate cut of 50 basis points has dropped from 53% on the previous day to 36%, and the Fed cut interest rates by 25 basis points for the first time in the case of the macro economy is not out of control. The international gold price fell slightly after testing the record high, and the overall performance was stable, and the market market has a trend of gradually moving the center of gravity upward.
After the first quarter of this year, United States inflation is falling rapidly, and there are three main reasons: first, the United States economy is weakening at an accelerated pace, excess savings are exhausted, and wages have declined significantly, and the second quarter of 2024 household debt and credit report released by the Federal Reserve shows that the total household debt of United States has soared to a record high of $17.8 trillion, and there is a phenomenon of insufficient consumption; second, international commodity prices are generally lower, United States and the core producer price index in July fell to 2.4% year-on-year, It is the lowest level since March this year, as the decline in upstream raw material prices is gradually transmitted to the downstream, the cost of terminal goods has declined, resulting in lower commodity inflation than service inflation; Third, the impact of expectations, pessimism about the United States economy began to ferment, and the New York Fed's recent survey data showed that consumers' three-year inflation expectations have been reduced to the lowest level since 2013.
United States inflation has eased significantly, it will take a long time to return to the 2% target range set by the Fed. United States housing inflation accounted for nearly one-third of the CPI, and housing inflation rebounded month-on-month in July, of which the rent of the main residence rose by 0.5 percentage points month-on-month, ending two consecutive months of decline and returning to the higher level of the year. The United States housing price index has accelerated year-on-year for three consecutive months since turning positive year-on-year in March this year, with a growth rate of 1.6% in June. In addition to housing, prices for services such as entertainment, education, communications and insurance also rose significantly in July. The conflict in the Middle East may lead to large price fluctuations in oil and other countries, and it will not be easy to solve the "last mile" problem of United States inflation.
Data source: Sina Finance
It is almost certain that the Fed will cut interest rates in September, or pay more attention to labor market performance. Recently, Fed officials have made generally dovish speeches, indicating that confidence in inflation returning to target has begun to increase, and the Fed's views with the market have begun to converge. Although the August inflation data will be released before the Fed's interest rate meeting in September, judging from the continuous decline in inflation, the conditions for the Fed to cut interest rates are basically ripe. The Fed's focus is beginning to take into account other risks to the economy, particularly labor market conditions. Fed official Goolsbee said after the release of inflation data that more attention would be paid to the employment sector if the job market is weak.
The market is expected to be priced by the international gold price, and the short-term market may be volatile and upward. The market has long adapted to the downturn in the United States economy, and has expectations for the Fed's next path of interest rate cuts, and market expectations have begun to be more rational, gradually aligning with the Fed's views, so the market performance is average after the release of this inflation data. In the current environment, when the international gold price is low, due to the support of fundamentals, buying orders will quickly pour in to push up the gold price. When the price breaks through the upper edge of the trend line, it is difficult to have an unexpected positive in the short term, and the buying power will gradually weaken, so the overall trend is a slow upward trend.
The events that continue in this round may be longer, and how high they can go depends on the degree of weakening of the United States economy. From the above analysis, it can be seen that the Fed's current round of interest rate cut cycle may last for a long time. Judging from the current political and economic situation, the degree of economic fragmentation caused by the great power game is deepening, which will not be conducive to economic recovery. Even if the Fed cuts interest rates, it may take a long time for the United States economy to recover upward, and coupled with the continued impact of geopolitical conflicts, the overall upward trend of international gold prices may continue for a long time. Due to the obvious negative correlation between the international gold price and the real yield of US bonds, the possible new high of the current round of international gold prices is mainly affected by the United States economy, and the current United States economy has contained certain risks, and the simultaneous weakening of the economy and inflation is the most obvious sign, but whether it is a hard landing remains to be seen, and the international gold price may still have a chance to hit a new high.
(The above content does not constitute investment advice or operation guide, it is the author's own point of view, and does not represent the position of this platform)
Editor|Jiao Yang Layout|Jiao Yang Vision|Zhang Zongwei
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