Tonight at 20:30, the U.S. July CPI data will ignite the “Federal Reserve's life-and-death situation for September rate cuts” — this is the most critical inflation data before the Federal Reserve's meeting, trillions of funds have already placed heavy bets in the U.S. stock and cryptocurrency markets, and the bulls and bears are entering the “countdown phase”!
One, Why is CPI a “policy weapon”?
Inflation is the core anchor point for Federal Reserve decisions:
- If CPI exceeds expectations and soars (year-on-year ≥2.8%, Core Monthly Rate ≥0.3%), it indicates that inflation is “out of control,” the Federal Reserve will delay rate cuts (or even restart rate hikes), directly strangling risk assets;
- If CPI is lower than expected (year-on-year <2.8%, Core Monthly Rate <0.3%), inflation cooling is confirmed, the market will bet on a 50 basis point rate cut in September, and risk assets will directly “go on a wild spree.”
Current market expectations:
- Unadjusted CPI Year-on-Year: Previous value 2.7% → Expected 2.8% (Inflation rebound expectation);
- Core CPI Monthly Rate: Previous value 0.2% → Expected 0.3% (Core inflation remains sticky).
Two, Trillion Dollar Gamble: Bulls and bears have gone all out!
Market funds are engaged in “high-stakes gambling”:
- U.S. Stocks: The S&P 500 futures long-short position ratio reaches 3:1 (bulls betting on “inflation cooling”), but leverage is at a six-month high, once the data is bearish, the risk of a crash increases significantly;
- Cryptocurrency: BTC and ETH perpetual contract funding rates soar to +0.15% (bulls go crazy with leverage), SOL, BNB, and other altcoin contracts break historical extremes;
- Derivatives Market: U.S. stock VIX volatility index implies “20% potential for a surge/drop,” the cryptocurrency market BTC options daily trading volume exceeds 12 billion USD (the degree of craziness in betting on direction is comparable to “delivery day”).
Three, Three Major Scenario Simulations: How will your assets survive the ordeal?
Scenario 1: CPI exceeds expectations (bearish for risk assets)
- Signal: Year-on-year ≥2.8%, Core Monthly Rate ≥0.3% (especially if rent and service inflation exceed expectations);
- Market Reaction:
- U.S. Stocks: S&P 500 plunges to test 4500 support, tech stocks (Nvidia, Microsoft) lead the decline, Nasdaq falls below 15000;
- Cryptocurrency: BTC drops to 62,000, ETH tests 3800, altcoins (SOL, DOGE) experience “waterfall-style corrections”;
- Dollar/Gold: The dollar index surged to 104, gold plunged below 2150.
Scenario 2: CPI meets expectations (oscillation game)
- Signal: Year-on-year 2.8%, Core Monthly Rate 0.3% (Precisely meets expectations);
- Market Reaction:
- U.S. Stocks: Sideways oscillation (S&P 4600-4650), funds are waiting for “next round of data (August non-farm payrolls)”;
- Cryptocurrency: BTC fluctuates in a range (63,000-65,000), ETH oscillates narrowly (3850-4000), altcoins are in a “mutual slaughter” between bulls and bears;
- Dollar/Gold: The dollar maintains 103.5-104, gold ranges between 2160-2170.
Scenario 3: CPI is below expectations (epic bullish)
- Signal: Year-on-year <2.8%, Core Monthly Rate <0.3% (Energy and commodity inflation exceed expectations and cool down);
- Market Reaction:
- U.S. Stocks: S&P 500 skyrockets towards 4700, tech stocks (Tesla, Meta) lead the surge, Nasdaq aims for 16000;
- Cryptocurrency: BTC breaks 68,000, ETH surges to 4200, altcoins (SOL, BNB) collectively “spike and explode”;
- Dollar/Gold: The dollar index plummeted to 103, gold surged past 2180 to create a historical high.
Four, Operational Strategy: Bet on the right direction = effortless profit, bet wrong = liquidation!
Above expectations (bearish) response:
- Short Selling: Short tech stocks in U.S. markets (Nasdaq ETF: QQQ), short altcoins (SOL, DOGE), set stop-loss at “key resistance levels” (e.g., BTC 66,000, ETH 4100);
- Hedging: Hold dollars, short-term bonds, and avoid high-leverage positions.
Meeting expectations (oscillation) response:
- Light Position Game: U.S. stocks trade in a range (buy low at 4600, sell high at 4650), cryptocurrency oscillates (buy low at BTC 63,000, sell high at 65,000);
- Caution: After volatility contraction, the next data may trigger a “breakdown crash/surge.”
Below expectations (bullish) response:
- Chase core assets: BTC, ETH, S&P 500 ETF (SPY), but beware of “buy the expectation, sell the fact” pullback (e.g., after BTC breaks 68,000, partial profit-taking may be appropriate);
- Altcoin Selection: Prioritize “rate cut beneficiaries” (SOL, BNB and other liquid targets), avoid small-cap stocks.
Five, Deadly Underlying Line: CPI “details trap”!
- Sub-item anomalies: If energy prices (oil prices) drag down CPI, but rent and service inflation exceed expectations, the market may “misjudge” (first drop then rise, or first rise then drop);
- Data Revision: Historical CPI data is often revised, beware of “secondary impact” (e.g., if this data is later revised upwards, it may trigger a correction).
Tonight, the market will face the “most brutal showdown” — the outcome of bulls and bears will be clear within 30 minutes of the CPI release! Are you ready to take on the challenge?
