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the federal reserve has reached a "decisive moment."

on wednesday (september 11) before the u.s. stock market opened, the u.s. department of labor released data showing a stronger-than-expected rebound in the core month-on-month inflation rate in august, dampening market expectations for the fed's rate cuts. data released by the u.s. department of labor showed that the u.s. consumer price index (cpi) rose 2.5% year-on-year in august, falling for the fifth consecutive month and hitting its lowest level since february 2021.

after the data was released, the market lowered its expectations for the fed's interest rate cut next week. cme's "fed watch" tool showed thatthe probability of a 25 basis point rate cut next week rose to 85% from 71%, while the probability of a 50 basis point cut fell to 15% from 29%.

affected by this, the three major u.s. stock indexes all plunged at the opening, gold fell, the u.s. dollar index rose in the short term, and u.s. oil and brent oil rose by more than 2% at one point...

a piece of important data:

the year-on-year growth rate of us cpi has fallen for five consecutive months

on the evening of september 11th, beijing time, the u.s. bureau of labor statistics released the august cpi data. the specific data showed thatthe u.s. cpi rose 2.5% year-on-year in august, falling for the fifth consecutive month.the market had originally thought that the growth rate would only slow to 2.6%.it rose by 0.2% month-on-month, which was in line with expectations; the year-on-year increase in core cpi was 3.2%, the same as the previous value and expectations, and rose by 0.3% month-on-month, slightly higher than the expectations and the previous value of 0.2%.

in terms of details, food prices rose by 0.1% month-on-month and 2.1% year-on-year; energy prices fell by 0.8% month-on-month and 4.0% year-on-year. among them, gasoline prices fell by 0.6% month-on-month and 10.3% year-on-year; fuel oil fell by 1.9% and 12.1% year-on-year.

it is worth noting that the housing index rose by 0.5% month-on-month and 5.2% year-on-year in august; the transportation service price rose by 0.9% month-on-month and 7.9% year-on-year.both are the main reasons for the high core inflation rate.

in this "interest rate cut race",as to how many basis points the federal reserve will cut interest rates in september, the market is divided into the "25 basis points" camp and the "50 basis points" camp.since the previous august non-agricultural data failed to be finalized,tonight's cpi data will become an important reference for judging the extent of the interest rate cut.

analysts believe that core inflation was slightly higher than expected, which to some extent weakened the possibility of the federal reserve's sharp interest rate cuts. the fedwatch tool of the cme group shows that after the data was released,the probability of a 25 basis point rate cut next week rose to 85% from 71%, while the probability of a 50 basis point cut fell to 15% from 29%.

richard flynn, managing director of charles schwab uk, said the report was just the latest in a series of indicators telling the fed that now is the time to turn. "some market watchers want the fed to cut rates by 50 basis points at its september meeting, but this could cause inflation to fall too quickly, which could be consistent with a recession. more gradual rate cuts would offset this and have historically been good for stocks. this is a long cycle, but slow and steady should win the day in this case."

neil birrell, chief investment officer at premier miton investors, said that inflation data was mostly in line with expectations, but core inflation was higher than expected, mainly driven by housing costs. the possibility of a 50 basis point rate cut by the federal reserve next week was hit hard by this data, but it was not enough to stop the fed from cutting interest rates.

chris larkin, head of trading and investment products at e*trade, said the market generally expects the federal reserve to cut interest rates by 25 basis points next week, and the cpi data released today has largely affected expectations of a rate cut, which may disappoint investors who hope for a larger rate cut.

seema shah, senior global investment strategist at principal asset management, commented that the fed's path to a 50 basis point rate cut has become more complicated due to higher-than-expected core inflation.

skyler weinand, chief investment officer at regan capital, said the august cpi "was in line with expectations, allowing the fed to initiate a rate cut at its september meeting, albeit a smaller 25 basis point." he said the data opens the door for the fed to respond to rising unemployment. weinand expects the fed to cut rates five to six times over the next year.

citi's latest forecast says the federal reserve will cut interest rates by 25 basis points in september and by a massive 50 basis points in november and december respectively.

global asset shocks

after the data was released, the three major u.s. stock indexes all plunged after opening on september 11, local time. wind data showed that as of 23:35 beijing time on september 11, the dow jones industrial average fell 1.3%, the nasdaq fell 0.65%, and the s&p 500 fell 1.09%.

the us dollar index rose in the short term, while non-us currencies fell. as of press time, the us dollar index was at 101.6742; the yen fell below the 142 mark against the us dollar, reaching a high of 140.72 during the day.

spot gold fluctuated after a short-term decline. as of press time, it was reported at $2,513.06 per ounce, down 0.11% on the day.

the price of the main comex gold futures contract also fell. as of press time, it was reported at $2,541 per ounce, down 0.08% on the day.

disclaimer: the content and data of this article are for reference only and do not constitute investment advice. investors who act accordingly shall bear their own risks.

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