inflation

According to Jinshi reports, Kristoffer Kjaer Lomholt, head of fixed income and foreign exchange research at Danske Bank, pointed out in a report that the market's attention to the 30-year U.S. Treasury yield is increasing, and this yield has now risen above 5%. He mentioned that the escalation of conflict in the Middle East has caused Brent crude oil prices to approach $100 per barrel, which puts pressure on inflation ahead of next week's Federal Open Market Committee (FOMC) meeting.As of the time of writing, the 30-year U.S. Treasury yield has risen by 0.3 basis points to 5.15%, close to a two-month high.

According to Jinshi reports, Joseph Lavorgna, Chief U.S. Economist at Sumitomo Mitsui Banking Corporation, stated that if the inflation rate does not slow down, Federal Reserve policymakers will lose their hard-earned credibility. He pointed out that in the past 70 years, there have only been six instances where the core inflation rate decreased year-on-year by 0.9% or more, and each time the inflation slowdown was due to the Federal Reserve tightening its policy.Lavorgna emphasized that the longer the Federal Reserve waits, the greater the probability that interest rates will rise above necessary levels.

According to Jinshi reports, World Bank Chief Economist Gill stated that the global economy is only "a few months" away from the worst-case scenario, at which point global growth will slow to 1.3%, and inflation is expected to rise to 4.5%.

According to Jinshi reports, World Bank Chief Economist Gill stated that the escalation of the Middle East war and supply disruptions could drive up inflation, thereby pushing interest rates higher.

Binance founder CZ recently posted on social media that artificial intelligence (AI) and Bitcoin (BTC) serve different functions; AI drives productivity improvements, while Bitcoin is used to combat inflation and protect wealth. CZ stated, "AI is great, but it cannot protect you from the effects of inflation; Bitcoin can."CZ believes that the market often views AI and Bitcoin as two major hot investment themes, but their natures are fundamentally different. AI is a technology that enhances business efficiency and economic productivity, while Bitcoin is a digital asset with a fixed supply. He pointed out that the AI industry is rapidly developing, with global companies continuously investing billions of dollars in AI software, data centers, chips, and other infrastructure, driving transformations in various sectors such as healthcare, finance, and manufacturing. However, AI companies can issue more shares and raise funds for expansion, and their investment value still depends on business performance and market competition. In contrast, Bitcoin has a total fixed supply of 21 million coins, and holders possess a non-dilutable scarce asset. CZ believes this characteristic gives Bitcoin long-term value storage properties, providing protection when the purchasing power of fiat currency declines due to inflation.CZ has also previously stated that the AI boom may attract some funds that would have originally flowed into the Bitcoin market. As AI companies like OpenAI and Anthropic gain more capital attention, some investors may sell other assets to allocate to AI-related investments. However, CZ believes that AI and Bitcoin are not in competition; rather, they should be viewed as complementary assets: AI drives technological advancement and productivity improvements, while Bitcoin offers a way to store value that is unaffected by supply expansion.

According to Jinshi reports, Goldman Sachs' latest research report shows that inflationary pressures in the United States are spreading from a few industries to a broader range of sectors. Although the current inflation level has not yet reached the peak of 2022, the coverage of rising prices is expanding, posing greater challenges for Federal Reserve policy. Goldman Sachs economist Jessica Rindels analyzed the degree of inflation diffusion based on the Personal Consumption Expenditures (PCE) price index, which the Federal Reserve focuses on, using a six-month annualized change rate.The data shows that compared to the average inflation level from 1990 to 2019, the pressure index for inflation categories exceeding 3% has reached about "6," while this index was "10" at the peak of inflation in 2022.The report points out that areas such as audio-visual equipment, financial services, healthcare, and transportation have become significant sources of current price increases. Meanwhile, housing rent inflation, which has a high weight in the PCE, is expected to fall below 3% in the fourth quarter of this year, potentially becoming an important factor in alleviating inflationary pressures.Goldman Sachs' analysis resonates with the recent concerns of new Federal Reserve Chairman Kevin Warsh regarding the "diffusion" of inflation. Warsh stated that preventing price increases from spreading to more sectors of the economy is an important task for the Federal Reserve. However, unlike the more explicit policy communication style of former Chairman Powell, Warsh currently refuses to provide specific guidance on interest rate paths.Jeremy Schwartz, a senior U.S. economist at Nomura Securities, stated that the Federal Reserve is reducing its forward guidance to the market, and this policy uncertainty has increased concerns on Wall Street. Meanwhile, hawkish voices within the Federal Reserve are rising. Dallas Federal Reserve President Logan has expressed support for moderate interest rate hikes, believing that the current economic resilience does not match the inflation risks.

According to Jinshi reports, as the conflict between the U.S. and Iran escalates over the weekend, the market bets that the Federal Reserve may need to raise interest rates to curb inflation, leading to a decline in gold prices. Following a drop of more than 2% last week, gold is currently trading around $3,995 per ounce.Escalating hostilities in the Middle East, including an attack on a key oil facility in Kuwait, have caused oil prices to soar. Tehran has stated that the ceasefire agreement between the U.S. and Iran is effectively null and void, intensifying concerns about potential severe disruptions to critical energy supplies.

According to Jinshi reports, Samuel Tombs of Pantheon pointed out that the University of Michigan Consumer Confidence Index rose from 49.5 in June to 54.4, exceeding economists' expectations of 50.5, but still below last year's average level. He stated that the decline in inflation expectations provides some comfort to the Federal Reserve, although Chairman Waller's tough rhetoric failed to further lower expectations.At the same time, the "lack of leverage" for workers means that the likelihood of wage growth rising due to the recent overall inflation rebound is very low.

According to Jinshi reports, Federal Reserve's Harker stated that the labor market is close to full employment. The current core Personal Consumption Expenditures (PCE) instant forecast shows a core inflation rate of 3.3%.

According to Jinshi reports, the preliminary value of the one-year inflation rate expectation in the United States for July is 4.2%, lower than the market expectation of 4.5%, and a decrease from the previous value of 4.6%.

According to Jinshi, the initial value of the U.S. inflation rate expectations for the 5 to 10-year period in July is 3.3%, which is consistent with both the expectations and the previous value of 3.3%.

According to Jinshi reports, gold prices have fallen below $4,000 per ounce and are expected to record a weekly decline of over 3%. The escalating hostilities between the United States and Iran have heightened market concerns, with rising energy prices potentially keeping inflation elevated and prompting the Federal Reserve to raise interest rates.Soojin Kim, an analyst at Mitsubishi UFJ Financial Group, stated that recent price trends indicate that the market is placing greater emphasis on the possibility that U.S. interest rates will remain high for a longer period, rather than the traditional safe-haven demand for gold.

According to Jinshi reports, Federal Reserve Vice Chairman Jefferson stated that he is firmly committed to restoring inflation to the target of 2%, which is consistent with the Federal Reserve's dual mandate.

According to Jinshi reports, Federal Reserve's Logan stated that he is very optimistic about the productivity improvements brought by artificial intelligence in the long term. However, the current demand for AI investment is strong and real, which may bring inflationary pressure in the short term.

According to Jinshi reports, Federal Reserve's Schmid said it is time to stop excluding food prices from the core inflation index.

According to Jinshi reports, Federal Reserve's Schmid stated that recent inflation data is encouraging, but it is still too early to draw conclusions.

According to Jinshi reports, Fed's Logan stated that the Federal Reserve should raise interest rates to address the high inflation issue, suggesting she may be prepared to oppose the decision to maintain interest rates later this month. Logan pointed out that the June inflation data indicates that price increases are beginning to slow, but it is not enough to convince her that inflation has returned to the Fed's 2% target path. She believes that a moderate increase in interest rates will help better balance the outlook and risks.

According to Jinshi reports, Federal Reserve's Logan stated that the downside risks to employment have diminished, while inflation risks are mainly focused on the upside.