After a week of global upheaval, this week is also not easy

U.S. to Release CPI Data

The U.S. will release the July PPI on August 13 and the July CPI on August 14, which will be the second-to-last CPI report released before the Fed's interest rate decision in September.

Market expectations suggest that the inflation rate in the U.S. for July may rise moderately, but not enough to affect the widely anticipated rate cut by the Fed next month.

Currently, the market expects that the July CPI in the U.S., both in overall data and the so-called core index excluding food and energy, is expected to rise by 0.2% compared to June.

The consumer price index (CPI) for June fell by 0.1% compared to May. The unadjusted CPI for June rose 3.0% year-on-year, the lowest level since June of last year. The unadjusted core CPI for June recorded an annual rate of 3.3%, below the market expectation of 3.4%, marking the lowest level since April 2021.

This week, Home Depot and Walmart will also release retail sales data and earnings reports, allowing investors to cross-verify the status of U.S. consumers. Consumption accounts for two-thirds of the U.S. economy and is very sensitive to the job market.

The Federal Reserve at the Center of the Storm

On August 9, local time, the Federal Reserve released a tentative schedule for the Federal Open Market Committee (FOMC) meetings in January 2025, 2026, and 2027. The Fed insists on holding eight meetings a year as part of its traditional schedule.

Last week, the Fed was already at the center of public opinion. On one hand, the Fed has kept interest rates high for more than 12 months. Last week, the market anticipated an emergency rate cut from the Fed, while on the other hand, the Fed also faced unprecedented political pressure.

Republican presidential candidate Trump stated last week that he should have a say when the Fed makes decisions about interest rates.

At a press conference in Florida, Trump said, "I feel that the president should at least have a say in this matter. Yes, I have strong feelings. I think, for me, I’ve made a lot of money, I’ve been very successful, and I think in many cases, my instincts are better than the Fed's or the chairman's instincts."

Previously, Trump insisted that he and Powell "get along very well," although some changes his team is considering include firing Powell or at least not reappointing him when his term as chairman ends in 2026.

Democratic presidential candidate Harris responded in Arizona, stating, "The Fed is an independent entity, and as president, I would never interfere with the decisions made by the Fed."

The Fed raised the benchmark interest rate by 5.25 percentage points from March 2022 to July 2023 to curb inflation. Trump generally supports lowering interest rates and frequently criticizes the Fed for raising rates in 2018.

Fed officials often emphasize the importance of central bank independence from political influence, and Powell has repeatedly stated that criticism from Trump or other officials will not affect monetary policy decisions.

Without political pressure, the Fed Board can make decisions solely based on whether they promote the long-term interests of the U.S. economy, rather than whether voters approve.

Japan Still Influencing Global Markets

The reversal of yen carry trades is a major reason for the recent market turmoil. In recent years, yen carry trades have been popular due to Japan's low interest rates keeping the yen low against the dollar. However, this changed when the Bank of Japan implemented its second rate hike of the year at the end of July, strengthening the yen.

Steve Sosnick, Chief Strategist at Interactive Brokers, stated that carry trades are "massive. No one really knows how big they are."

Currently, Japan remains the focus of global market attention.

On August 15, Japan will release the preliminary year-on-year GDP deflator for the second quarter. Market expectations are for Japan's economy to grow by 2.4% in the second quarter.

Japan's first-quarter real GDP preliminary value fell by 2.0% year-on-year, with a forecast of a 1.5% decline; it fell by 0.5% quarter-on-quarter, with a forecast of a 0.4% decline; the preliminary nominal GDP for the first quarter rose by 0.1%, with a forecast of a 0.2% increase. The revised real GDP for Japan's first quarter fell by 1.8% year-on-year, with a forecast of a 1.9% decline, and the preliminary value fell by 2%.

Bank of Japan Deputy Governor Masayoshi Amamiya stated that if the economic outlook materializes, they will adjust the degree of easing, emphasizing the need to firmly maintain the current easing policy; if market volatility leads to changes in economic forecasts, risk perceptions, and the likelihood of achieving expectations, the interest rate path will clearly be adjusted; there will be no rate hikes during periods of market instability.

In short, the GDP data for the second quarter released by Japan will greatly influence the Bank of Japan's interest rate decisions and, in turn, affect global market trends.

Additionally, the market is often more susceptible to volatility in August, as investors tend to take vacations, leading to reduced trading volumes.

ChainCatcher reminds readers to view blockchain rationally, enhance risk awareness, and be cautious of various virtual token issuances and speculations. All content on this site is solely market information or related party opinions, and does not constitute any form of investment advice. If you find sensitive information in the content, please click "Report", and we will handle it promptly.