7.13.24: Cooling Inflation Increases Rate Cut Bets

For Public Readers: Weekly Key U.S. and China brief market notes by Larry Cheung's Analyst Staff Team for our Public Email List

Jul 13, 2024

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In our emails, we will provide the following coverage points:

Brief Overview of U.S. & China Markets
Macro Chart in Focus
U.S. & China Upcoming Economic Calendar
Chart That Caught Our Eye

U.S and China Markets Brief Snapshot 🇺🇸 🇨🇳

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S&P 500 Index: 5,615.35

KWEB (Chinese Internet) ETF: $28.81

Analyst Team Note:

Macro Chart In Focus

Analyst Team Note:
Bond traders are increasingly betting on a larger-than-usual 50 basis point interest rate cut by the Federal Reserve in September, as evidenced by heightened activity in the federal funds futures market.
This shift in expectations follows softer-than-anticipated inflation data released on Thursday, which prompted a surge in buying of October contracts.
The market currently fully prices in a quarter-point cut in September, with expectations of 60 basis points of total easing by year-end.

Upcoming Economic Calendar

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U.S Economic Calendar (Upcoming Data Points)

China Economic Calendar (Upcoming Data Points)

Analyst Team Note:
The June 2024 inflation report showed a significant cooling in US inflation, with the core CPI) rising only 0.1% from May, the smallest increase in three years.
Overall CPI fell for the first time since the pandemic's onset, largely due to cheaper gasoline. This slowdown in inflation, particularly in housing costs, provides strong evidence that the Federal Reserve may be able to cut interest rates soon, potentially as early as September.
The data exceeded economists' expectations, with the year-over-year CPI increase dropping to 3%, down from 3.3% in May.

Chart That Caught Our Eye

Analyst Team Note:
Per BofA, inflows to US large-cap funds annualizing 2nd largest on record and large-cap growth stocks at highest level vs. small-cap value since July 2000.