"I wanted to wait until the CPI data came out on Friday, but I didn't expect that someone would get a head start on Thursday. "

On Thursday, U. S. stocks fell slightly for most of the day, only to accelerate as late trading approached, with traders scrambling to take final action ahead of Friday's CPI report. In the last hour of trading, the S & P 500 fell twice as much.

Economic data and earnings have been relatively lacklustre so far this week, and the market does not have much certainty until Friday's CPI report. Waiting for the arrival of CPI, we can get a more accurate insight into the next round of trading in the market and the Fed's interest rate decisions.

Unexpectedly, some funds could not wait for the announcement of CPI and took the lead in leaving the scene. So there was the scene of last night: the whole was calm in the first half of the night, and people were caught off guard at the end of the day.

Why did US stocks fall first as a tribute to CPI before it was disclosed? There was a wild sell-off at the end of the day, what is the market worried about?

1. Why did the funds flee in a hurry at the end of the day?

It has been pointed out that, according to common sense, if the data itself is difficult to predict, or the importance is low, it is not likely to influence the stock market in the previous trading day.

But unlike in the past,The sell-off took place before the release of key data.With the sudden emergence of a large number of selling and diving in the last hour of late trading in US stocks overnight, it is hard not to associate them with the CPI data to be released today.

Market participants seem to be really worried that the CPI data released on Friday may be higher than the market generally expected, thus taking final action before the close.Would rather leave the scene first and wait until the data dust settles before making a decision.

2. Where does this "no sense of security" come from?

(1) higher interest rates on US bonds have pushed up the Fed's expectation of raising interest rates.

Us bond yields continued to rise ahead of the inflation data, with inflation-related 10-year Treasury yields closing above 3 per cent in two of the past four trading days.

The rise in US bond interest rates has in turn boosted the Fed's expectations of raising interest rates-according to overnight index swaps linked to the Fed session, the market now expects the Fed to raise interest rates by another 50 basis points in June and July and 44 basis points at the September meeting, up from 33 basis points two weeks ago.

Joseph Trevisani, senior analyst at FXStreet, said

Higher-than-expected May CPI data could push the yield above its previous closing high of 3.13%, while a lower-than-expected CPI result will not push down yields on 10-year Treasuries or other Treasuries, simply because the Fed will raise interest rates based on existing inflation.

(2) Xiaomo's report can be called a shredder of "inflation cooling expectations", causing panic.

Friday's May CPI data in the United States made investors anxious, while a report by Xiaomo led to speculation that inflation may be hotter than expected.

Michael Feroli, chief economist of JPMorgan Chase & Co, forecastsThis time the CPI will be higher than the market generally expected.。

CPI is likely to rise 0.8 per cent month-on-month in May, up from 0.7 per cent expected and 0.3 per cent in April, thanks to strong increases in energy prices (4.6 per cent) and food prices (0.7 per cent).

According to this forecast, CPI growth in May is expected to remain at 8.3 per cent, higher than Wall Street's consensus of 8.2 per cent, while core CPI is expected to rise 0.47 per cent month-on-month, but is expected to slow to 5.8 per cent from 6.2 per cent in April, below Wall Street's consensus of 5.9 per cent.

JPMorgan Chase & Co made an in-depth analysis of the core CPI section and saidThere have been "solid price increases" in many major basic categories.。

Feroli also saidSomething worse has happened.With the increase in travel after the peak of the epidemic, accommodation prices have recently begun to rise, and he expects prices to rise strongly again in May, an increase of 2%. At the same time, public transport prices have also risen sharply due to increased travel demand and soaring fuel prices.

The price of cars is not optimistic either. Although the May data signal looks mixed, the bank does not expect much change in May, with new car prices expected to rise 0.4%The price of used cars is expected to rise moderately again.

（3）Us government officials declare "bad news" in advance.

White House Press Secretary Karine Jean-PierreShe gave the market a shot on Wednesday, and she doesn't expect this week's inflation report to bring good news. Jean-Pierre said inflation data to be released on Friday were likely to show more evidence of high inflation.

"We expect the headline inflation data to rise. We expect the conflict between Russia and Ukraine to have some impact on core inflation, especially if you take into account the impact of rising air ticket prices and jet fuel prices. "

Us Treasury Secretary YellenAttending the event on Thursday, he also acknowledged that there are risks of further increases in food and energy prices in the United States.

（4）This indicator indicates that the May CPI data may be "relatively bad"

A relatively unpopular indicator in financial markets that reflects the expectations of traders most sensitive to US inflation also shows that CPI, the US consumer price index, will reach or exceed 8.5 per cent in the next five months from May.

The pricing of inflation-protected bonds in the TIPS market or derivatives imply:

Us CPI growth in May, announced on Friday, will reach 8.5 per cent year-on-year, higher than the median forecast of 8.2 per cent by economists and in line with the 40-year high set in March. Traders also expect inflation to climb to 8.6 per cent in June and July, hit 8.8 per cent in August and September, and fall slightly to 8 per cent in October.

"this will be a very disturbing number," said Mark Zandi, chief economist at Moody's Corporation, which will reignite concerns about whether inflation has peaked.