Traders, investors and economists are counting on July U.S. consumer price data (CPI) to show a decline in headline inflation, but the CPI report may be hiding a market-shattering data.
Taking into account the recent declines in natural gas and commodity prices, economists generally expect July CPI to fall slightly to 8.7% y/y from June’s 9.1% (nearly 41-year high), while July’s core CPI y/y will drop from the previous 9.1% y/y rate 5.9% to 6.1%.
The core CPI could be as high as 6.2%, said Gargi Chaudhuri, head of investment strategy for the Americas at BlackRock iShares. Analysts at Goldman Sachs warned that U.S. inflation could remain unpleasantly high in the near term.
The core CPI is a metric that strips out volatile food and energy costs, Chaudhuri judged, if the data rises, it will be significant and can be regarded by the market as reflecting the real underlying inflation trend, and it will also break the financial market over the past month. Hopes for inflation peaking prevail in the world.
“Inflation remains a top concern for investors, with continued deterioration in inflation weighing on consumer and business confidence, however, economic data remains fairly mixed,” said Tony Roth, chief investment officer at Wilmington Trust Investment Advisors, and Luke Tilley, chief economist. Concerns have grown that the Fed’s aggressive rate hikes could push the U.S. into a recession.”
“While we still expect inflation to moderate going forward, the data will remain high for a number of factors, complicating the outlook,” Roth said.
Brad Conger, deputy chief investment officer at Hirtle, Callaghan & Co, explains: “Suppose you work for a company of 1,000 people, and in May, 28 of your colleagues quit and accepted new job offers. Salary is 3.6% and that’s where the problem arises, there are 972 employees who are left who are aware of the new salary that the departing employee is getting, which has become their new labor reservation price. That’s inflation. The reason inertia is created is why it is so difficult to eradicate.”
“The same goes for rents,” Conger said. “A few new tenants are priced above the average, but everyone else knows what the new effective rent is.”
Before the key inflation data was released, Wall Street was cautious, and the three major U.S. stock indexes were collectively exhausted on Tuesday (9th).that fingerLeading the decline by nearly 1.2%, at the same time, the U.S. bond yield curve has seen a more serious inversion. Before the deadline, the 2-year U.S. bond yield rate and 10-Year U.S. Treasury YieldThe spread between them is negative 47 basis points.