The extension of the tariff ceasefire between China and the U.S. has significantly boosted the Chinese stock market, while highly globalized markets like gold and the dollar have not reacted much.
The extension of the deadline is not surprising for the financial markets; in the short term, raising tariffs does not benefit Trump. For Trump, who is concerned about market trends, his real test is tonight - at 20:30, the U.S. will announce the July CPI, and before that, he needs to create a stable environment for the market.
This CPI announcement can be described as 'a crucial moment':
This is the first important data since Trump fired the head of the U.S. Bureau of Labor Statistics, and the outside world will pay special attention to the 'credibility' of this inflation data.
Recently, the U.S. Bureau of Labor Statistics has been in a bit of a tough spot:
Budget cuts and staff layoffs have led to some places directly stopping the collection of CPI data.
The other 72 regions also collected less data.
The result is a gap in price and rent data, which can only be filled with models and estimates. It's like cooking without three types of seasoning; you just add some 'substitutes,' and the taste might be okay, but it always feels a bit inauthentic. Economists worry this will lead to greater data volatility and may even be questioned for 'falsification' or 'excessive inflation.' In other words, this data itself has flaws (missing samples, estimates used), which means the market reaction should be discounted due to higher uncertainty.
The consensus among most Wall Street investment banks is that it will be a bit hotter than last month, but it won't be explosive.
The expected distribution is slightly optimistic, but this is not good news, as it raises the market's expectations.
If the data is below expectations, a rate cut in September is basically confirmed.
Data meeting expectations is not necessarily good news; the market will strive to find clues to see how inflation will evolve in the future. The market wants to know whether tariffs have indeed started pushing up prices; previously, it was more about foreign producers absorbing costs themselves, but this time it may be passed on to consumers.
If the data exceeds expectations, the market's expectations for the Fed's interest rate cuts may collapse.
$BTC $ETH $XRP #CPI数据来袭 #币安Alpha上新
The most likely scenario is that details show tariff pressures are accumulating. If the price increases are concentrated on tariff-sensitive goods while service prices remain stable, the market will consider it 'transitory inflation,' and the interest rate cut narrative can continue; however, if service prices also rise broadly, it could make the stock market nervous, fearing that rate cuts might be delayed.
