(Original title: Great reversal! Inflation in the U.S. has exploded again, but U.S. stocks have surged by more than 1,100 points, and Europe has followed suit. What happened? This country has a sudden “big news”: half of senior officials are speculating in stocks)
On the evening of October 13, the global market is doomed to be restless.
Just now, the U.S. inflation data, which has attracted much attention from the global market, was released-the September CPI and core CPI both exceeded market expectations. After the data was released, the three major U.S. stock indexes opened sharply lower across the board. The Dow Jones opened more than 500 points lower, the Nasdaq opened 2.74% lower, and the S&P 500 opened 1.99% lower. As of 23:40 on October 13, Beijing time, the Dow Jones index had surged by more than 1,100 points from the lowest point at the beginning of the session, rising by more than 2%. The Nasdaq index and the S&P 500 index also all turned up, with an increase of 1.77 points respectively. %, 1.97%. European stock markets also staged a reversal in late trading. As of the close of the day, the European Stoxx 50 index rose by 0.93% from a drop of nearly 2%.
Perhaps the main reason for the major reversal in the European and American markets after the “outrageous” inflation data came to fruition was that the Fed’s interest rate hike risk, which the market has been worried about, “falls to the ground.” After the data was released, the swap contract linked to the date of the Fed meeting fully priced in the 75 basis points of interest rate hikes in November, after the continued weakness in the U.S. stock market, which meant that the Fed’s 75 basis points of interest rate hikes had been fully priced in.
Recently, the latest data from the South Korean financial market has also sparked heated discussions. On October 13, local time, Yonhap News Agency reported that the latest survey data released by the “Leader Index” of the Korea Enterprise Analysis Institute showed that more than 50% of senior officials at or above the vice-ministerial level in the Yin Xiyue government are participating in stock market investment, and the total market value of listed stocks held by 13.4825 billion won (about 67 million yuan), about 200 million won (about 1 million yuan) per capita.
U.S. inflation explodes again
Just now, the latest CPI data released by the United States has completely stirred the global market. On the evening of October 13, Beijing time, the U.S. Department of Labor officially disclosed the consumer price index (CPI) for September. The U.S. CPI in September rose 8.2% year-on-year, higher than the market’s expected 8.1%, and the previous value was 8.3%; It rose 0.4% month-on-month, double the market expectation of 0.2%, and significantly higher than the previous value of 0.1%.
In addition, the US core inflation rate, which the market and the Fed are more concerned about, also exceeded market expectations. The data shows that after excluding the volatile food and energy prices, the core CPI in the United States rose by 6.6% year-on-year in September, which was not only higher than the market expectation of 6.5% and the previous value of 6.3%, but also hit a new high since August 1982. ; Core CPI rose 0.6% month-on-month, higher than market expectations of 0.4%, unchanged from the previous value.
After the September CPI data of the United States was released, the three major U.S. stock indexes opened sharply lower across the board. The Dow Jones index opened more than 500 points lower, the Nasdaq opened 2.74% lower, and the S&P 500 opened 1.99% lower, and then went all the way up, staged a big reversal. As of 23:40 on October 13, Beijing time, the Dow Jones index had surged by more than 1,100 points from the lowest point at the beginning of the session, rising by more than 2%. The Nasdaq index and the S&P 500 index also all turned up, with an increase of 1.77 points respectively. %, 1.97%.
At the same time, European stock markets also staged a reversal in late trading. As of the close of the day, the European Stoxx 50 index rose by 0.93% from a decline of nearly 2%, the French CAC40 index rose by more than 1%, the German DAX index rose 1.5%, and the British rich The TIME 100 rose 0.35%, while Italy’s FTSE MIB rose 1.56%.
After the “booming” inflation data came to fruition, the main reason for the major reversal in the European and American markets may be that the Fed’s interest rate hike risk, which the market has been worried about, has landed. After the release of the data, the swap contract linked to the date of the Fed meeting fully priced in a 75 basis point hike in interest rates in November, after the U.S. stock market continued to weaken and the Fed’s 75 basis point rate hike had been fully priced in.
In addition, U.S. Commerce Secretary Raimondo also made the latest statement that the Biden administration will consider some targeted tariff reduction policies as inflation data continues to rise.
Specifically, looking at the CPI data in the United States in September, the prices of food and rent are still rising significantly, and the landlord’s equivalent rent rose by 0.8% month-on-month in September, the largest monthly increase since June 1990. Housing inflation was 6.59%, up from 6.24% in the previous month and a record high. Rents rose 7.21% year-on-year, up from 6.74% in the previous month and the highest level on record.
However, on the eve of the closely watched inflation data disclosure, JPMorgan Chase’s trading department warned that once the CPI data of 8.3% in August is higher than the 8.3% CPI data in August, it will have a severe impact on U.S. stocks. The S&P 500 tumbled 4.3% after the unexpectedly-beating August CPI data was released.
Rate hike storm coming?
After the latest US inflation data is released, the focus of the market will turn to the Fed. Will the rate hike storm continue?
In fact, the U.S. stock market has almost fully priced in further interest rate hikes by the Federal Reserve. Swap contracts tied to the date of the Fed meeting fully priced in a 75 basis point hike in November after the data was released.
Some analysts pointed out that no matter whether the CPI data in September strengthens or weakens, the Fed’s next meeting on interest rates may not change the action of raising interest rates by 75 points. Mizuho’s latest report also pointed out that the US core inflation rate will not change the Fed’s expectations of a 75 basis point rate hike in November.
Waller, a Fed governor who has voting rights on the FOMC, also said that the economic data released will not significantly change his and Fed officials’ views on the extent of interest rate hikes at the November meeting.
In addition, on October 12, local time, the minutes of the Fed’s latest September meeting showed that Fed officials were surprised by the speed of inflation and expected that the pace of interest rate hikes would not stop. The Fed officials present at the meeting agreed that as of now, there is still no sign of U.S. inflation easing. High inflation has hurt low-income people in the United States, and the federal funds rate should continue to be raised.
This means that the U.S. inflation will not stop, and the Federal Reserve’s interest rate hike will not stop.
At present, the market’s expectations for the Fed to raise interest rates continue to rise. According to the CME FedWatch tool, the probability of the Fed raising interest rates by 75 basis points for the fourth consecutive time in November is close to 85%, and the Fed will also raise the federal funds rate target to at least 4.5% to 4.75% .
Members of the U.S. Federal Open Market Committee (FOMC) pointed out at the meeting that the U.S. economy needs to slow to cool inflation. At the same time, the FOMC lowered its forecast for the U.S. economy, forecasting annualized GDP growth of just 0.2% in 2022 and 1.2% in 2023.
However, it should be pointed out that although the CPI data in September will not change the Fed’s policy path in November, it may determine the direction of the Fed’s monetary policy in December this year. After the core inflation rate again beat expectations, the current market worry is that the Federal Reserve may continue to raise interest rates by 75 basis points in December.
The JPMorgan report noted that stronger inflation in September will re-price bond markets, increasing the likelihood of another sharp rate hike in December.
At present, Nomura’s US economic research team has raised its forecast for the peak rate of the Fed’s interest rate to 5.25%-5.50%, and expects to raise interest rates by 75 basis points in November and December this year, followed by a 50 basis point hike in February next year. , to raise interest rates by 25 basis points in March.
In this regard, real estate billionaire and former Starwood Group CEO Barry Sternlicht warned that the Fed’s eagerness to raise interest rates and curb inflation is “draining” the US stock market. He warned that even “healthy fish” would die as the economy and liquidity began to shrink.
The Korean market is bursting with news
At present, a latest data from the Korean financial market has also sparked heated discussions.
On October 13, local time, Yonhap News Agency reported that the latest survey data released by the “Leadership Index” of the Korea Enterprise Analysis Institute showed that more than 50% of senior officials at or above the deputy ministerial level in the Yin Xiyue government are participating in stock market investment.
According to the report, the Korea Business Analysis Institute came to the above results after analyzing the shareholdings of 118 officials at or above the deputy ministerial level whose personal property information was disclosed by the current government in South Korea.
Specifically, 67 of them (57%) held listed stocks by themselves, their spouses or children, totaling 654, including 523 domestic stocks and 131 foreign stocks. The average wealth of senior officials holding listed stocks is 4.12835 billion won (about 20.76 million yuan). As of the close on October 7, the market value of listed stocks held by the above-mentioned senior officials reached 13.4825 billion won, or about 200 million won per capita.
In terms of stock market value, Park Sung-geun, head of the secretary to the Prime Minister of South Korea, ranks first, with a stock market value of 6.11965 billion won; followed by Wu Yugeng, director of the Food and Drug Safety Division, Kwon Ki-seop, deputy minister of the Ministry of Employment and Labor, and the Ministry of Commerce, Industry and Energy. Negotiate with Minister Andergen.
Specific to individual stocks, the most popular stock is the South Korean giant-Samsung Electronics, followed by KAKAO, with 22 senior officials holding this stock; in addition, NAVER, Apple (19 each), Nvidia (16) Ranked the top five; Hyundai Motor (15), SK Hynix (12), Tesla (11) followed. It is worth mentioning that nearly 50% of the top ten stocks are US stocks.
The direct involvement of senior government officials in the stock market is also an open secret in the United States. According to US media reports, for a long time, Speaker of the US House of Representatives Nancy Pelosi and some members of Congress have been accused of using “insider information” to help their relatives invest in stocks and make huge profits. So much so that American public opinion called Pelosi’s husband “the God of Capitol Hill”.
Statistics from the US “Business Insider” website show that in 2021, members of the US Congress and their immediate family members collectively traded stocks and financial assets worth $631 million.
Recently, former US President Trump even publicly attacked Nancy Pelosi, accusing Democrats of failing to introduce a bill to ban lawmakers from trading stocks before the midterm elections. Previously, Pelosi suggested that a bill to strengthen the Stock Act to limit lawmakers’ stock trading failed to pass, and members of Congress may need more time to review the bill.
Proofreading: Li Lingfeng
Statement: Securities Times strives for true and accurate information. The content mentioned in the article is for reference only and does not constitute substantive investment advice. Operational risks are based on this.
Download the official APP of “Securities Times” or follow the official WeChat account to keep abreast of stock market dynamics, gain insight into policy information, and seize wealth opportunities.