With the CPI falling to 2.9% in July, meeting market expectations, inflation seems to have cooled down. This data, combined with PPI growth lower than expected, has powered the rise of the US stock market. However, expectations of a Fed rate cut in September still persist in the market, especially given the current economic environment where investors are closely watching for future policy directions. This article will explore the impact of these data on rate cut expectations and analyze how Trump's economic policies could reshape future inflation trends.
1. The Impact of CPI and PPI on Rate Cut Expectations
In July, the CPI dropped to 2.9%, meeting market expectations, indicating a slight cooling of inflation, possibly leading the Fed to be more cautious in its decision in September. The lower-than-expected growth of PPI is also a positive signal, which could reduce expectations in the market for a larger rate cut. The extent of the rate cut will depend on the future economic data trends, especially whether inflation can be kept within the Fed's target range.
2. Considerations for the investment industry
In the current market environment, industries to consider for investment may include:
– Consumer goods industry: With easing inflation pressure, consumer spending may rebound, benefiting stable consumer goods companies.
– Technology industry: Technological innovation and digital transformation continue to drive growth, with long-term growth potential still existing.
– Utilities industry: Typically performs steadily in times of economic uncertainty, providing stable cash flow and dividends.
3. Trump's economic policies may be at risk of following the 1980s...

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