Original title: US core inflation shows stubborn market follow-up pressures still large
US core inflation is showing stubbornness and subsequent market pressures remain elevated
Li Lei/Illustrator
Xuedong ran
The US inflation data released on October 13 is still at a fever pitch. Judging from the core inflation data after excluding the volatile energy and food, US inflation is very deeply rooted and accelerating. The momentum is strong, and it is difficult to change in the short term.
US CPI rose 8.2% year-on-year in September, just 0.1% above the 8.1% expected by the market, and down from the previous value of 8.3%. However, the core CPI in September, which is more important to the market, rose 6.6% year on year, which was not only higher than the market expectation of 6.5% and the previous value of 6.3%, but also hit a new high in 40 years since August 1982. It rose 0.6%, beating market expectations of 0.4% and unchanged from the previous value.
After the data was released, the market reacted violently. The yield of the US dollar and US bonds rose sharply, and US stocks and gold fell sharply. After that, the market began a major reversal. However, less than two hours after the opening bell, there was a major counterattack on the disc, and all three major stock indexes were wiped out and turned upside down. It then accelerated in mid-day trading, with the three major indexes all rising more than 2%.
However, on the 14th, US stocks and commodities fell sharply at the opening, and the US dollar and US bond yields also began to rise. It is estimated that after a day of digestion, the market began to calm down.
The performance of the market is surprising This situation is not uncommon in the transactions in the past. The inflation data was originally bad news, but the market suddenly rose in the day’s trading. Obviously, the market dominated by the bullish feeling. Later, the market returned After the taste came, the decline that should have appeared.
This is mainly due to the deep inflation in the United States, and the complex international geopolitical pattern in the future. Geopolitical turmoil will play a role in fueling prices.
Currently, an important part of US inflation is rents. Its weight is about a third of the CPI. It is still rising strongly in September. The inflation rate for rents and housing was 6.59%, which was higher than the previous month’s 6.24% and hit a record high.
Oil-based bulk energy prices fell in September, as did US used car prices, and despite these declines, prices rose in other food, transportation and medical services sectors. Even if inflation starts to decline with the Fed raising interest rates in the future, it will take some time to reach the Fed’s 2% inflation target. Therefore, the market expects that the Fed will raise interest rates by 75 basis points in November as a near certainty, and there is also a 20% possibility of raising interest rates by 100 basis points.
The geopolitical front shows no signs of transformation, and directly threatens energy prices.
On October 13, the Ministry of Foreign Affairs of Saudi Arabia issued a statement confirming that the US government has asked Saudi Arabia and other major oil producing countries to delay the plan to significantly reduce crude oil production starting in November this year by one month. The statement emphasized that Saudi Arabia does not accept the “order” of the United States.
This is due to the fact that the “OPEC +” formed by members of the Organization of the Petroleum Exporting Countries including Saudi Arabia and countries that do not produce OPEC oil such as Russia have decided to cut production significantly since November this year. The decision to cut monthly production by an average of 2 million barrels per day sent crude futures prices sharply higher, from $76 to $93 in a two-week period.
Previously, US President Biden visited Saudi Arabia and other countries for his trip to the Middle East to lower crude oil prices, in order to deal with the global energy crisis caused by the conflict between Russia and the Ukraine, especially to ease inflation in the United States.
The actions of OPEC+ since then have shown that they have completely failed to comply with the wishes of the West, and have instead made the opposite decision, much to the contrary of the US, defined by American diplomatic rhetoric as “hostile”. act”. The United States has called for a “reassessment” of its relationship with Saudi Arabia.
This decision from the countries of the Middle East is also based on the changes in the energy market and the strategic consideration of their own economic transformation. Seeing that new energy vehicles are popular in the international market, oil vehicles are losing their position in the market gradually, and the trend of new energy instead of old energy is becoming more and more evident. The countries that produce oil in the Middle East must prepare for this and provide new support for industrial development the country in the future.
The current international geopolitical conflict represented by the Russian-Ukrainian war provides a good window of opportunity, which can increase energy prices, occupy more resources, and lay the foundation for transformation. From this perspective, it is likely that energy prices will remain high for a long time in the future.
Geopolitical conflicts have also exacerbated the food crisis. Russia has expressed concerns to the United Nations about the Black Sea grain export deal in recent days and is preparing to refuse to renew the agreement next month. The Black Sea grain export agreement was reached with great difficulty in July mediated by the United Nations and Turkey. The agreement paves the way for Ukraine to resume grain exports from the Black Sea, temporarily averting a global food crisis.
India’s grain export ban may be tightened again. Heavy rains have damaged key crops such as rice planted in India during the summer and could fuel inflation in India, with fears that rising food prices in turn prompted New Delhi to impose more restrictions on the export of grains such as rice and wheat.
Recently, Argentina also plans to tighten wheat exports. The country is the seventh largest country in the world’s wheat supply. Originally, Russia and Ukraine accounted for a third of the world’s wheat exports. In addition to the tightening of Argentina, the global wheat supply chain was under further stress.
The inflation situation in the United States can be described as a combination of internal and external attacks, and it is difficult to change in the short term. The Fed has a long way to raise interest rates. The increase in interest rates is a sword of Damocles hanging over the market.Return to Sohu, see more
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