The United States has just released the latest inflation data, causing trouble for the Federal Reserve and trouble for the US Treasury. According to September's CPI, the inflation rate in the United States still reached 3.7% year-on-year. Although the United States does not have the habit of releasing cumulative inflation data, reviewing the inflation trend from January to September this year, it is expected that inflation in the first nine months has increased by 3.6% to 4.0% year-on-year.
In the face of this situation, Biden showed great optimism, and Yellen, who was looking at the money bag for the US government, may be the one who is really worried.
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The CPI in August showed a strong rebound, rising from 3.2% in July to 3.7% in August, far exceeding market expectations.
Before the release of September's data, the market believed that the CPI data would slightly decline, with statistics showing an average predicted value of 3.6%. But the actual published value once again exceeded market expectations.
And we cannot just look at year-on-year data, but also pay attention to the changes in month on month data. The CPI in September increased by 0.4% month on month compared to August, which is also higher than the market's forecast.
So far, Wall Street analysts have generally agreed that inflation in the United States has not decreased, but is showing a significant rebound at a speed that exceeds market expectations.
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Perhaps it was a coincidence or a deliberate arrangement. Less than 12 hours after the release of CPI in the United States, the Chinese statistical department also released China's CPI.
In September, China's CPI did not rise or fall year-on-year, which means that the CPI was 0%, with a slight increase of 0.2% month on month.
Another more informative data is that the cumulative year-on-year increase in CPI from January to September this year was 0.4%.
In other words, the current inflation in the United States is at least 9 times higher than ours, and the United States is being pulled increasingly apart from the key economic data of inflation.
So far, the United States has completed 11 interest rate hikes, with a rate increase of 5.25%. However, despite this, inflation in the United States is still far from the target range, and now it looks very much like candy, not only slowing down in the pace of decline, but also occasionally rebounding.
However, US President Biden still deliberately revealed his optimistic attitude to the outside world. After the release of CPI data, Biden stated that inflation data is very popular, implying that the current inflation data is quite good.
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The Federal Reserve clearly cannot turn a blind eye to Biden's unwillingness to acknowledge the inflation issues still facing the US economy.
This is also currently Powell's biggest headache, as the continuous interest rate hikes have significantly affected the US economy. The United States hopes for a soft landing in the economy, but it seems almost impossible now. The Fed's cautious consideration of whether to raise interest rates now seems to have little significance.
In the middle of the year, the Federal Reserve skipped a rate hike, but the subsequent inflation data was very pessimistic, leading to the Federal Reserve raising interest rates again.
In September, the Federal Reserve skipped raising interest rates again, but now it seems that the possibility of a rate hike in November is increasing.
As soon as the inflation data is released, the US bond yield immediately jumps, indicating the expectations of the bond market and increasing the probability of the Federal Reserve raising interest rates.
Before the data was released, the 10-year US Treasury yield was only 4.51%, but immediately after the data was released, there was a rapid increase, reaching a high of 4.72%.
The two-year US Treasury also showed the same trend, previously as low as 4.96%, but after the release of CPI data, it returned to 5.08%.
The rise in yields means that investors have started a new round of selling US bonds.
The most uncomfortable situation in this situation may be US Treasury Secretary Yellen, as she is about to attend the global sovereign debt conference. The current performance of US bonds and the increasing likelihood of future defaults mean that others are likely to be besieged and criticized by representatives of various countries during the conference.