Overnight, the rapid rise of the US stock market seems to have lost momentum.

The S&P 500 index ended the previous four consecutive trading days of gains, and some popular targets of the "Trump trade" collectively cooled down. While the US stock market softened, the frenzy of selling in the US bond market continues.

The market is beginning to worry that Trump's possible tariff and fiscal stimulus measures may push inflation higher and keep interest rates elevated.

How do institutions view the reignition of "inflation"?

Strategists at Deutsche Bank stated that with Trump's possible implementation of tariffs and fiscal stimulus measures, inflation risks will further rise. In addition, central banks around the world have been implementing loose policies, while economic growth data unexpectedly improves. Therefore, inflation will be a prominent concern that may prompt the Fed to take a more hawkish stance.

Co-President Scott Kleinman of Apollo Global Management also cautioned the market not to be too complacent about the current inflation and interest rate trajectory in the United States. He mentioned that Trump 2.0 policies, such as tax cuts and imposing import tariffs, could act as catalysts for inflation.

Susannah Streeter, Funds and Markets Director at investment platform Hargreaves Lansdown, also believes that the recent strengthening of the U.S. dollar reflects the market's expectations of policies Trump may implement, including tax cuts, increased tariffs, and immigration restrictions, all of which are inflationary factors that could mean higher benchmark interest rates in the coming years.

As an investor, what should be the focus next?

• Keep an eye on 21:30! The United States will release the latest CPI data.

As the first heavyweight data after the US presidential election, the US October CPI report to be released at 21:30 on Wednesday Beijing time is likely to have a key impact on the future policy path of the Federal Reserve.

This has led some Wall Street insiders to ponder whether the next market trading theme will once again shift from the glamorous 'Trump trade' of the past week to the interest rate perspective revolving around the Fed's rate cutting process.

It is generally expected in the industry that the U.S. CPI for October to be announced tonight is expected to rise by 2.6% year-on-year, up 0.2 percentage points from the previous month of 2.4%, and is expected to remain flat at +0.2% month-on-month; core CPI year-on-year and month-on-month growth rates are expected to remain at 3.3% and 0.3% respectively.

Of note, Minneapolis Fed President Kashkari recently stated that he will focus on the upcoming inflation data to determine whether another rate cut at the Fed's December meeting is appropriate. When asked what factors could lead policymakers to hit the pause button next month, he pointed out, 'Only an unexpected inflation development would cause such a significant change in outlook.'

MetLife Investment Management economist Tani Fukui pointed out that there has been significant market volatility since the election. She believes that any major surprises in Wednesday's CPI report could trigger more significant market volatility, although perhaps not as intense as the fluctuations in the days following the election.

In addition, a Guokun Overseas macro research report stated that the market's concerns may not only be about Trump's potential expansionary policies, but may also include worries about the upward movement of the mid-term inflation core. Trump's election just made this concern premature or explicit, and the bank believes that inflation tends to be internalized, which is also the 'three highs' new normal that it has always described the US economy as—namely high inflation, high interest rates, and medium-high growth.

The most important factor affecting the mid-term inflation trend is inflation expectations, and the bank tends to use the University of Michigan's 5-10 year inflation expectations as an anchor for mid-term inflation forecasts. And if we compare the 1-year and 5-10-year inflation expectations, we will find that the divergence between the two is becoming more and more apparent, in other words, ordinary residents still believe that inflation will continue to be a long-term concern.

• Nvidia's performance in the third quarter will be released next week according to the Eastern Time on November 20, which is considered absolutely key to the future trend of US technology stocks and AI concept stocks as a whole.

$NVIDIA (NVDA.US)$ Currently, analysts widely believe that the development of AI applications is still in the early stages, and the Blackwell cycle will continue to drive Nvidia's performance upward. Wall Street analysts such as Morgan Stanley and UBS have also raised Nvidia's target price ahead of their results. Specifically,

UBS: Buy rating, raising the target price from $150 to $185;

Melius Research: Buy rating, raising the target price from $165 to $185;

Piper Sandler: Hold rating, raising the target price from $140 to $175;

UBS: 'Outperform' rating, increasing the target price from $140 to $165;

Morgan Stanley: Shareholding rating, raising the target price from $150 to $160.

JPMorgan expects Blackwell's new product line to boost company revenue in the January quarter, with sales expected to be between $5 billion and $6 billion. Melius Research analysts believe that the capital expenditure plans for the five major AI infrastructure investments are "very robust", predicting a 24% increase in datacenter capital spending for Microsoft, Amazon, Meta, Google under Alphabet, and Oracle, reaching $282 billion by 2025.

Currently, the market's focus has begun to shift from elections to monetary policy and the profitability of US stocks. Therefore, Nvidia's performance may be one of the key clues to the next market trend.

How should one trade at present?

Credit Suisse's strategy team research report suggests that Trump's policy combination of "loose fiscal policy + high tariffs + tight immigration" may simultaneously raise US inflation and economic growth.

The bank believes that Trump's return to the White House corresponds to the following asset clues:

Major categories of assets:

1) US stocks: The permanent TCJA act and further reduction of corporate tax rates improve US stock profit expectations, in the short term, US stocks may receive a boost overall, with sectors such as cyclical, growth, and finance, which are sensitive to tax rates, performing better.

2) The combination of "loose fiscal policy + high tariffs + strict immigration" may trigger risks of re-inflation, affecting the pace of interest rate cuts by the Federal Reserve, bullish for the US dollar, and bearish for US bonds.

3) Gold: The policy combination raises inflation expectations, depresses real interest rates, while impacting the global trade landscape, generating safe-haven demand, which may benefit gold.

4) Copper: Imposing comprehensive tariffs and restricting the development of clean energy in the United States may impact the demand side of copper and other industrial metals, lithium, and other green metals.

Chinese assets:

1) A-Shares & Hong Kong Stocks: ① The core impact lies in extreme trade policies. With high tariff expectations, the external demand chain may come under short-term pressure. Conversely, areas like electronic semiconductors, military industry which focus on self-controllable/domestic substitutes may benefit; ② Trump's encouraging attitude towards fossil fuel production and addressing geopolitical issues may lower the central oil price, bullish for the energy and petrochemical sectors; ③ Faced with external pressure, attention should be paid to the scale and details of domestic stimulus policies, real estate chain, consumer sectors, and other domestic demand segments may receive a boost.

2) Renminbi exchange rates: Expectations of high tariff policies may lead to short-term pressure on the Renminbi.

Editor/Somer