Rate Of ReturnCPI fell short of expectations, what impact will it have on U.S. stocks?
First, let me share a quote from "The Algorithm of Life". Just some personal thoughts.
Last night, the U.S. June CPI month-on-month increase fell short of expectations, marking the fifth consecutive month below market expectations. This means that since the April tariffs, market concerns about inflation seem to have been somewhat "unfounded." This plays right into Trump's hands, as he believes he has won again and immediately called on the Federal Reserve to cut interest rates by 300 basis points on Truth Social!!!
But is this really the case?
Shelly has been saying that whether the Federal Reserve can cut interest rates largely depends on Tuesday's inflation data. According to CME's FedWatch, after the CPI report was released, the probability of keeping rates unchanged at the July meeting rose from 93% to 97%, an increase of 4 percentage points; the likelihood of a rate cut in September dropped sharply from 60% to 50% after the inflation data was released.
After the report was released last night, stock prices were under pressure: the Dow fell 0.98%, the S&P 500 dropped 0.4%, and the Nasdaq also saw significant intraday declines. At the same time, U.S. Treasuries were also under pressure, with the 30-year Treasury yield hitting a new high, setting a historical record. It was a double whammy for stocks and bonds.
So, why is this happening?
In fact, U.S. clothing prices rose 0.4% month-on-month in June, footwear prices increased 0.7% after several months of decline, and furniture and bedding prices also turned from a drop to a 0.4% increase. These all indicate that the cost pressures from tariffs are gradually being passed on to consumers. The full inflationary impact of tariffs may take time to materialize, and if Trump's proposed August 1 tariff measures take effect, the inflationary impact on goods prices may take several more months to appear.
Therefore, many traders and Wall Street analysts believe this CPI report shows that tariffs are starting to have an effect, and it is wise for the Federal Reserve to remain cautious in the coming months.
So, there are too many factors affecting stock prices. Stock prices are not determined by you, nor by Trump (the businessman president) alone, nor by "Bao Shifu" (who seems to be on the verge of being fired), nor by Wall Street, but by the market as a whole (the market is always right).
As the saying goes, history repeats itself, but not in a simple way. Therefore, it is important to build a complete investment system—one that knows how to operate under various circumstances, with multiple pivot points, an algorithmic system that can seize certainty in randomness, rather than following the crowd.
"The Algorithm of Life" says that a person's life is the result of statistics, composed of countless fragments of time and events. In the short term, life is full of randomness; in the long term, it reveals a kind of inevitability. In a world of randomness, strive to create certainty.
Life is like this, and so is stock trading.
$NVIDIA(NVDA.US) $Tesla(TSLA.US) $SPDR S&P 500(SPY.US) $Invesco QQQ Trust(QQQ.US) $SPDR S&P 500(SPY.US) $NASDAQ Composite Index(.IXIC.US) $Dow Jones Industrial Average(.DJI.US)
The copyright of this article belongs to the original author/organization.
The views expressed herein are solely those of the author and do not reflect the stance of the platform. The content is intended for investment reference purposes only and shall not be considered as investment advice. Please contact us if you have any questions or suggestions regarding the content services provided by the platform.
