July's CPI was not dovish enough, which was yesterday's biggest impact on the market. CPI could only suppress the probability of a rate hike in September, not a complete reversal, causing financial markets in the early morning to once again price inflationary pressures
The probability of a September CME swap rate hike has risen from yesterday's peak of 36% to 40% now, still on the edge of danger, so tonight's PPI data will be the focus
CPI data shows inflation's impact on the consumer side, while PPI shows the impact of inflation on businesses. Whether it can further suppress the probability of a rate hike in September is much more important than previous ones
Tonight's PPI data focus is whether the nominal PPI and core PPI exceed expectations by 0.2%
Best combination: Nominal PPI less than or equal to 0.1%, core PPI ≤ 0.2%, meaning both CPI and PPI will cool down, further weakening the September rate hike and boosting risk markets
Moderate portfolio: nominal 0.2%, core 0.3%, moderate inflation, similar to CPI, suppressing September rate hikes and benefiting risk markets, but still not dovish enough,
Worse portfolio: Nominal ≥ 0.3%, core 0.4%. Corporate inflation is rebounding, increasing the probability of a rate hike in September and suppressing risk markets
Worst combination: Nominal ≥ 0.4%, core ≥ 0.5%. Consumer inflation diverges from corporate side, leading to accelerated inflation, overturning optimistic expectations for July CPI and increasing expectations for a rate hike in September. #7月CPI平稳落地, rate hike expectations in September have cooled
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