Us inflation broke out again, and in May CPI hit a 40-year high compared with the same period last year, which surprised the market.

The three major u. S.stock indexes fell nearly 3%, the biggest daily decline in three weeks and the biggest weekly decline in more than four months, and the Dow fell nearly 900 points. Most Chinese stocks rebounded against the market, becoming a rare bright spot in Nasdaq 100 stocks.

This is bad news for the Fed, where expectations of an interest rate hike soared to the highest level in the cycle, and Wall Street began to discuss whether the Fed would raise interest rates by 75 basis points, or even Barclays expects to do so next week.

A further surge in inflation could also cause more trouble for President Joe Biden, whose approval ratings are ahead of the mid-term elections later this yearFall to a new low，Decades of high inflation is undermining the confidence of the American people.

'We will try to keep inflation down and we will do everything we can to keep prices down in the United States, 'Mr. Biden said after the release of CPI data.

Inflation in the United States has exploded again!

On June 10th, the Bureau of Labor Statistics released data showing that US CPI rose 8.6 per cent year-on-year, the highest since December 1981, and higher than the 8.3 per cent increase last month and expected. CPI rose 1 per cent month-on-month, significantly higher than the 0.7 per cent expected and 0.3 per cent last month.

Core CPI rose 6 per cent year-on-year, down from 6.2 per cent last month, but still higher than the expected 5.9 per cent; core CPI grew 0.6 per cent month-on-month, the same as the previous month, but higher than the 0.5 per cent expected.

Energy costs dominate the overall surge in CPI.The energy price index rose 34.6% from a year earlier, the biggest year-on-year increase since September 2005.

The cost of housing is rising sharply.Housing prices rose 5.45 per cent in May from a year earlier, up from 5.14 per cent in April and the highest level since 1991.

Inflation is spreading, although the surge in commodity prices is slowing (the smallest increase since September 2021), butThe cost of services, however, is accelerating and is now at its fastest pace since 1991.

Worst of all, the real average hourly wage in the United States fell 3.0% in May from a year earlier, meaning that price increases outpaced wage increases for the 14th month in a row.

Us stocks plunge and US debt collapses

The CPI data dashed hopes of a peak in US inflation, with the three major US stock indexes opening lower.

In the endThe three major indexes closed down for three days in a row, the biggest closing decline since May 18 for two consecutive days.

The Nasdaq continued to lead the decline, closing down 3.52% at 11340.02 points, the lowest since May 24, and approaching the closing low set on November 3, 2020 when it fell below 11300 points on May 24.

S & p closed down 2.91% at 3900.86, its lowest level since may 19th.

The Dow closed down 880 points, or 2.73%, at 31392.79, its lowest close since May 20.

Russell 2000, a small-cap stock index dominated by value stocks, closed down 2.73%, its lowest level since may 25.

The technology-heavy Nasdaq 100 index closed down 3.56%, outperforming the market, its lowest level since May 24, and Russell 2000 fell for three days in a row.

The Chinese stock Bilibili Inc. rose more than 3%, Pinduoduo rose more than 2%, and NetEase, Inc rose nearly 2%, making it a rare bright spot among the Nasdaq 100 stocks.

Of the six major technology stocks in FAANMG and now GANMMA, Amazon.Com Inc closed down 5.6 per cent to its lowest level since May 25, Netflix Inc fell 5.1 per cent to its lowest level since May 24, and Meta closed down nearly 4.6 per cent, the lowest since April 27. Apple Inc and Microsoft Corp, both members of the IT sector, fell nearly 3.9 per cent and 4.5 per cent respectively, hitting new lows since May 20, while Alphabet, the parent company of Alphabet Inc-CL C, fell 3.2 per cent to its lowest level since May 26.

These technology stocks have all fallen this week. Amazon.Com Inc is down more than 10%, Netflix Inc is down more than 8%, Microsoft Corp is down nearly 8%, Microsoft Corp is down more than 6%, and Apple Inc is down more than 5%.

Treasury yields rose across the board after the CPI announcement.

The yield on benchmark 10-year Treasuries rose above 3.10 per cent in intraday trading for the first time in a month, up more than 10 basis points on the day.

The yield on two-year Treasuries, which is more sensitive to the interest rate outlook, rose above 3.00 per cent in intraday trading, the highest since 2008 and up more than 18 basis points on the day.

The market expects the Fed to be more aggressive.

The US CPI burst again in May, and traders expect the Fed to raise interest rates more aggressively.

Fed swaps show that the market expects the Fed to raise interest rates by 50 basis points at meetings in June, July and September. In addition, in terms of pricing, the market expects a probability of raising interest rates by 75 basis points in July to be 50%.

After the report was released in May, some analysts predicted that inflation was highly likely to hit a new year-on-year high because the next CPI report was likely to rise at roughly the same monthly rate. The Fed may still have to take aggressive action to continue to raise interest rates sharply after the July meeting.

Some analysts predict that the Fed will raise interest rates by 75 basis points as soon as next week: Barclays became the first large Wall Street institution to raise interest rates by 75 basis points in June, or even next week.

Jonathan Millar, an economist at Barclays, said that now the Fed has every reason to raise interest rates by more than the market expected in June. The Fed may raise interest rates by 75 basis points in June or July. Instead, it is expected to do so in June.

Quincy Krosby, chief equity strategist at LPL Financial, also mentioned that the Fed meeting next Tuesday through Wednesday will be particularly important, and the market wants to hear how the Fed expects to combat costs that have exceeded economists' expectations. It is clear that there will be more rate hikes in the future, but the Fed may start talking about the possibility of 75 basis points.

American consumer confidence has shattered.

The latest released data showThe initial consumer confidence index of the University of Michigan hit a record low of 50.2 in June.It was much lower than the expected 58.2 and well below the May final value of 58.4.

In terms of closely watched inflation expectations, the initial inflation expectation in June 1 was 5.4%, higher than the expected 5.3%, and the final value in May was 5.3%.The 5.4% figure was the same as the previous high, the highest level since 1981.
Joanne Hsu, director of the Michigan consumer confidence survey, said in a statement: throughout the survey, consumers were strongly concerned that inflation would continue to erode their incomes, and the factors they cited were unlikely to abate any time soon.Eighty-eight per cent of consumers expect US interest rates to rise next year, a record high.

Consumers' assessment of their personal finances has deteriorated by about 20%.46% of consumers attribute their negative views to inflationThis is up from 38% in may; there has been only one survey since 1981, when the economy was already in recession.