Many people do not understand why the inflation data tonight, which is in line with market expectations and is good for interest rate cuts, began to fall after the data was released. Inflation seems to be in line with expectations. But in terms of breakdown, rental inflation has begun to stop falling, and rental inflation accounts for a large proportion of US inflation, so the market has doubts about whether US inflation can continue to fall as expected in the future. This also led to a reduction in the magnitude of the September interest rate cut from 50 basis points to 25 basis points. The previous article analyzed that if the interest rate is only cut by 25 basis points, the positive impact on the market is actually limited, and the market expected a high probability of a 50 basis point cut before today's data. This inflation data broke the market's expectations, and the market's interpretation of this data is biased towards the negative.
So we can't just look at the surface of macro data when looking at it, we must analyze it in depth from the perspective of the market, otherwise we will be misled by the data.
Once again, there will be first-time application data tomorrow, and the market is expected to fluctuate again.
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