It is premature to talk about cooling inflation and interest rate cuts, fearing a repeat of the terrifying history of violent interest rate hikes to 20% in 1980.

With the July CPI falling to 2.9%, meeting market expectations, inflation seems to have cooled down. This data, along with PPI growing lower than expected, has brought upward momentum to the US stock market. However, market expectations for a rate cut by the Federal Reserve in September still exist, especially in the current economic environment where investors are concerned about the future policy direction. This article will explore the impact of these data on rate cut expectations, and analyze how Trump's economic policies may reshape future inflation trends.

July's CPI falling to 2.9%, meeting market expectations, shows that inflation has cooled down, which may make the Federal Reserve more cautious in its decision in September. The lower-than-expected growth of PPI is also a positive sign, which may reduce market expectations for an increased rate cut. The intensity of the rate cut will depend on the future economic data trends, especially whether inflation can remain under control within the Fed's target range.

In the current market environment, industries to consider for investment may include:

– Consumer IndustryWith the easing of inflationary pressures, consumer spending may rebound, benefiting stable consumer goods companies.

– Technology industryContinuous drive of technological innovation and digital transformation, long-term growth potential still exists.

– Utilities industryTypically perform steadily in periods of economic uncertainty, providing stable cash flow and dividends.

With Trump's inauguration and his economic protectionist stance, he has continuously expressed dissatisfaction with tariffs on China, Mexico, Canada, and European countries, indicating a further tendency to impose additional tariffs, which may lead to a significant rise in domestic prices in the USA, rekindling inflationary pressures. In addition, in the situation where inflation has not been fully controlled, his demand for faster rate cuts may put the not completely extinguished inflation back on an upward trajectory. This may inevitably evoke memories of the historical stance of Paul Volcker, who was the chairman of the Federal Reserve in the 1980s. At that time, precisely because price inflation could not be suppressed, Paul Volcker advocated a policy of aggressive interest rate hikes, temporarily raising the interest rate to 20%. It is worth noting that Volcker was the mentor of the current Chairman of the Federal Reserve, Powell.

The CPI and PPI data for July provided guidance for the Fed's decisions, but the future economic policies and the global trade environment remain uncertain. When investors choose industries and stocks, they should closely monitor these macroeconomic signals and the potential impact of policy changes. Trump's economic policy may significantly affect future inflation rates and interest rate trends, further increasing market uncertainty.

The Trader Funds trade