Will the US dollar cut interest rates in September?
Many are waiting for the August CPI data to be released this week.
Last night, the data finally came out, stunning the entire market.
Why is it said to be stunning?
Because many people are completely confused.
Is this good news or bad news?
For the current United States, news that is neither good nor bad is bad news, so the US stock market plummeted.
Let's go straight to the data.
On the evening of September 11th Beijing time, the Bureau of Labor Statistics announced that the US CPI rose by 2.5% year-on-year in August, falling for the fifth consecutive month, in line with market expectations.
However, the core CPI rose by 3.2% year-on-year in August, in line with expectations, and the core CPI rose by 0.3% month-on-month, slightly exceeding expectations.
It's clear when compared that in July, the CPI rose by 2.9% year-on-year, the core CPI rose by 3.2% year-on-year, and the core CPI rose by 0.2% month-on-month.
What do these data mean?
In terms of the data itself, there are two meanings.
First, we have said that the Fed's expectation for interest rate cuts based on CPI is likely to be below 2.5%, or even below 2.2%.
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So, if the August CPI is below 2.5%, it means that the possibility of a rate cut in September has greatly increased; if the CPI is above 2.5%, it means that the data is still very entangled; if the CPI rebounds to above 2.8%, it means that it is impossible to cut rates and may even raise rates.
Now, the CPI just happens to be exactly 2.5%!
What can one say?
We can only say that the Americans are too good at making data, and those responsible for the statistics do not offend anyone, please let the big gods above make the decision.
Second, the August CPI growth rate is lower than last month, the core CPI growth rate is the same as last month, but the month-on-month increase of 0.3% is higher than last month's 0.2%!
This is equivalent to smiling at you from above and stabbing you from below.
The story behind the data is that the internal struggle in the United States has not yet been resolved.
We say that the internal struggle in the United States has not yet been resolved, and a few days ago we summarized the economic data released since September, which is obviously fighting each other.
Today, let's briefly review.
1.
On September 4th, the US Department of Labor announced the number of job vacancies, only 7.673 million people, far less than the expected 8.1 million people.
2.
On September 5th, the August ADP employment increase was 99,000 people, surprisingly lower than 100,000 people, far less than the expected 145,000 people.
3.
On September 5th, the August manufacturing PMI index was 47.2, lower than the expected 47.5, and less than 50 for the fifth consecutive month.
4.
On September 6th, the August non-farm employment increased by 142,000 people, although lower than the expected 165,000 people, but far higher than the previous value of 114,000 people.
In addition, the August unemployment rate was 4.2%, lower than the July 4.3%!
At that time, we said that the first three data were extremely weak, but the fourth non-farm employment data showed that the labor market did not continue to deteriorate, and the unemployment rate decreased, which was a weak counterattack.
Now the August CPI data more clearly shows that the internal struggle in the United States has not yet been resolved, so what's the point of cutting interest rates in September?
Can you make major decisions when your family is still arguing?
If those who support interest rate cuts forcibly pass the resolution, those who oppose interest rate cuts will clamor to say that you will be responsible for the problems.
Everyone knows that there will definitely be problems with the US dollar interest rate cuts, who dares to take this responsibility?
The market is still holding on to the fluke mentality, the "FedWatch" tool of the Chicago Mercantile Exchange shows that the possibility of a 25 basis point rate cut next week has risen from 71% to 85%, but the possibility of a 50 basis point rate cut has been greatly reduced from 29% to 15%.
Overall, the US dollar interest rate cut in September is likely to be a mirage, what is the market reaction?
On September 7th, we said that the US Treasury 10-year and 2-year yield spread was lifted, the US dollar index plunged, and the US stock market fell sharply, which is the three major financial markets of the US dollar, US bonds, and US stocks all recognizing the recession of the US economy.
Later, the US stock market rebounded, and on September 10th, we found that the Japanese helped the United States to save the market, and the Bank of Japan and the Japanese pension fund worked together to operate, and bought US stocks again.
At that time, we raised a question, how many days can the Japanese help the US stock market support?
The result is that it can't hold for a day!
Last night, as soon as the August CPI data came out, the US stock market couldn't hold on, and it plunged immediately after the opening!
The three major US stock market indexes all plunged, and as of 22:30 on September 11th Beijing time, the Dow plunged more than 700 points, with a drop of more than 1.7%, the S&P 500 index fell by 1.32%, and the Nasdaq fell by 0.78%.
Some people say, no, it has risen again this morning.
I don't know if everyone has noticed that the US stock market is very strange in the past two days, there is always a period of time that falls uncontrollably, and then, in the following period of time, it starts to rise under control.
What does this mean?
It means that some people are afraid that the US stock market will fall directly and collapse, to put it bluntly, they don't want to cut interest rates, and they work together with Japan to support the US stock market, as long as the US stock market falls, they will support it upwards.
We are very curious how many days they can support?
It is very likely that they want to support until the interest rate meeting next week.
All these data compiled together, the conclusion is that the recession of the US economy is certain, the market panic sentiment is rapidly spreading, but the US dollar is still unlikely to cut interest rates in September.
The internal struggle around the US dollar interest rate cut has not yet been resolved, and it is difficult for the US dollar to cut interest rates.
This also explains from one side that we have refused to provide help, let the Americans fight internally.
This is just like the old saying, those who do evil will die, and there is no exception in ancient and modern times, both at home and abroad.