Hello everyone, today we pay attention to the performance of overseas markets.
Dow broke through 46,000 points
On the evening of September 11, the three major U.S. stock indexes rose sharply. The market believes that the latest key consumer inflation indicators will not hinder the Fed from lowering its benchmark interest rate next week.
The Dow rose more than 500 points, the Nasdaq rose about 0.65%, and the S&P 500 rose about 0.76%. All three major stock indexes hit record highs during the session.
On the news, the August Consumer Price Index (CPI) rose 0.4% month-on-month, higher than economists' expectations; but rose 2.9% year-on-year, consistent with expectations. Excluding food and energy, the core CPI rose by 0.3% month-on-month and 3.1% year-on-year, both in line with expectations.
The day before the release of the report, the Producer Price Index (PPI) unexpectedly fell by 0.1% month.
At the same time, the employment market has shown signs of cooling: as of the week ending September 6, the number of people applying for unemployment benefits for the first time increased by 27,000 from the previous week, to 263,000 after the season adjustment, the highest since October 2021, higher than the market expectations of 235,000.
Affected by the data, U.S. Treasury yields fell on September 11, and the 10-year Treasury yields fell to 4%.
As evidence of slowing U.S. economic growth increases, the CME "FedWatch" tool shows that the market is almost certain that the Fed will cut interest rates by 25 basis points at the end of its September 17 meeting,At the same time, the probability of interest rate cuts by 50 basis points has also increased.
Jay Woods, chief market strategist at Freedom Capital Markets, said: "The 25 basis points rate cut is almost certain, and this set of data still leaves room for interest rate cuts of 50 basis points, especially in terms of unemployment data. The key is to look at the 10-year U.S. Treasury yield. If there is a '3-header', the market still has room for upward."
Regan Capital's Skyler Weinand said: "Inflation is relatively stable, which gives the Fed more room to maneuver and focuses more on curbing the continued weakening of the labor market. We expect the Fed to cut interest rates by 25 basis points next week, and follow up two more 25 basis points each this year."
The weakening of the job market prompted Wall Street to count on a more radical path to rate cuts. More and more economists expect the Federal Reserve to cut interest rates by 25 basis points each time in the remaining three interest rate meetings this year. Chairman Powell cautiously "opened the door" to cut interest rates last month at Jackson Hole's annual meeting, while more recent data suggests a slowdown in hiring continued into August.
Ellen Zentner of Morgan Stanley Wealth Management said: "Current inflation is only a key 'submarine', and the labor market is still the main line. Today's CPI seems to offset yesterday's PPI, but it is not 'hot' to make the Fed deviate from its focus on weakening employment. This means interest rates will be cut next week, and there is a high probability that there will be a follow-up."
Analysts said: "The weaker the labor market, the less important the inflation is. This is a balance technique, and the balance tends to be more 'full employment' than 'price stability'. Especially after the annual employment data was significantly downgraded and the non-agricultural data was weak last week."
China's assets soared
On the evening of September 11, the Chinese stock index surged nearly 3%, and the two major Hong Kong stock index futures rose by more than 1% simultaneously in the night trading. I believe that A-shares and Hong Kong stocks will perform well on Friday.
Alibaba soared 7%, while Baidu's stock price rose about 4%. There are latest reports that Alibaba and Baidu use self-developed AI chips, and China's technology has ushered in a major transformation. According to people familiar with the matter, Alibaba and Baidu have begun to use their own internally designed chips to train their artificial intelligence models, partially replacing the AI chips produced by Nvidia.
Source: China Fund News, Volkswagen News-Dazhong Daily
