Tonight, the U.S. June CPI data was released, showing that inflation in the United States has cooled across the board.
It is worth noting that after the data was released, traders expected that there was a 25% chance that the Fed would cut interest rates by 25 basis points for the third time this year.
US President Biden said that today's CPI report shows significant progress in combating inflation.
Gold and silver soared.
In the evening, the three major US stock indexes fluctuated.
Gold and silver skyrocketed. Gold even broke through $2400 an ounce.
In the European market, several important indices soared. The US dollar index fell, and US bonds also took a dive.
Offshore renminbi rose to a one-month high against the US dollar. In addition, A50 index futures also rose sharply, turning from decline to rise.
Popular China concept stocks in the US stock market soared collectively, with Baidu and JD.com up about 6%, Xpeng up nearly 5%, and Alibaba up more than 3%.
Important data was released in the US.
US CPI in June increased by 3% year-on-year, with an expected growth of 3.1%, and the previous value increased by 3.3%. The month-on-month CPI in June in the US decreased by 0.1%, with an expected growth of 0.1%, and the previous value was 0%.
US core CPI in June increased by 3.3% year-on-year, the lowest growth rate in more than three years, with an expected growth of 3.4%, and the previous value increased by 3.4%. The month-on-month core CPI in June in the US increased by 0.1%, the smallest increase since August 2021, with an expected growth of 0.2%, and the previous value increased by 0.2%.
In addition, the initial jobless claims in the US as of July 6 was 0.222 million, with an expected value of 0.236 million and a previous value of 0.239 million.
Gregory Faranello, Managing Director of AmeriVet Securities' US Interest Rate Trading and Strategy, said that the US economy has weakened, and the inflation rate is also declining. This is good news for the Fed, which expects that employment and inflation data will become more friendly in the coming months, leading the Fed to start cutting interest rates, although this will be a slow and cautious process.
Lindsay Rosner, Investment Director of multiple departments at Goldman Sachs Asset Management, said that between today and the September Fed meeting, there are three more releases of inflation data, and today's data is crucial to helping the Fed gain confidence that inflation is still developing in the right direction. The heat of economic data seems to have dissipated. After last week's labor market data cooled down, it received cooler inflation data, indicating that the Fed may cut interest rates in September.
Powell sends an important signal.
On Wednesday, local time, Fed Chairman Powell testified before the House Financial Services Committee on the semi-annual monetary policy report and answered questions from legislators.
Powell said at the congressional hearing that although recent inflationary pressures have moderated, the Fed is not yet fully convinced that inflation can return to its 2% target level.
He emphasized that although there is some confidence that inflation is subsiding, current progress is not enough to assert that it can achieve and maintain its target. This shows that the Fed still needs to see more evidence that inflation pressure has been fundamentally alleviated before considering an interest rate cut.
It is worth noting that Powell mentioned that the Fed does not have to wait for inflation to drop to 2% to consider a rate cut, which leaves room for future monetary policy adjustments. However, he also pointed out signs of weakness in the labor market, indicating that this may be a key factor driving the Fed to take the next step.
According to reports, Powell's testimony has caused widespread attention in the market. Although he did not give an exact timetable for rate cuts, the market widely interpreted it as the decision point of the Fed to gradually approach rate cuts. Barclays strategist Joseph Abate predicts that the Fed may end quantitative tightening policy in December to maintain bank reserves around $3.1 trillion and avoid unnecessary pressure on the financing market.
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