Global news： CPI ＂smashed＂ interest rate cuts in the first half of the year. It is expected that US stocks will close down across the board. Biden rarely speaks.
On Wednesday (April 10th), Eastern Time, the US CPI data in March exceeded expectations in an all-round way, and the Fed’s interest rate cut expectation was "crushed". In the first half of the year, the interest rate cut expectation was less than 20%, and the first cut expectation was postponed to September, and the expected number of interest rate cuts was even compressed to one. Us bond yields climbed and us stocks fell across the board.
[US stock index]
At the close, the S&P 500 index fell 0.95% to 5160.64 points; Dow Jones index fell 1.09% to 38,461.51 points; The Nasdaq index fell 0.84% to 16,170.36.
American debt
The yield of US bonds soared again collectively, and the yield of 10-year US bonds broke the key threshold of 4.5% and closed at 4.514%. The yield of two-year US bonds, which is most sensitive to the Fed’s policy interest rate, rose nearly 20 basis points to close at 4.941%. The yield of 5/30-year US bonds has been upside down for the first time since September.
[Market Review]
According to data released by the United States on Wednesday, the CPI rose by 3.5% year-on-year in March, exceeding the market expectation of 3.4%; The month-on-month increase was 0.4%, which was also higher than the market expectation of 0.3%. Excluding food and energy, the core CPI in March rose by 3.8% year-on-year and 0.4% quarter-on-quarter, both exceeding market expectations of 3.7% and 0.3%.
Such a comprehensive and unexpected CPI report directly hit the market. After the CPI was released, the pricing of swap contracts showed that the first interest rate cut expected by traders was postponed from September to November, and it is expected that the Fed will only cut interest rates by about 40 basis points this year. Traders who guarantee the overnight financing rate (SOFR) option even bet on cutting interest rates only once in December this year. Goldman Sachs postponed the first rate cut this year from June to July, and it is expected to cut interest rates only twice this year.
Nick Timiraos, known as the "Fed’s mouthpiece", wrote that fiery inflation weakened the reason for the Fed to cut interest rates in June. Fed officials have always been optimistic that the so-called soft landing can be achieved, that is, inflation slows down without triggering a sharp decline in economic activity. To this end, some officials hope to cut interest rates pre-emptively before the economy is obviously weak. The latest CPI data deprives them of the basis to provide credible reasons for cutting interest rates, which may prompt them to keep interest rates unchanged at the highest level in 23 years until they see more cracks in the economy.
However, the minutes of the Fed meeting released overnight were somewhat dovish, and the decline of US stocks also narrowed after the announcement. The minutes of the Federal Reserve show that almost all officials think it is suitable to cut interest rates this year, and the brewing will soon start to slow down the contraction. Nick Timiraos said that the Fed is preparing to slow down the contraction soon, and the monthly reduction of US Treasury bonds may be reduced.
It is worth mentioning that Biden "can’t sit still" for this CPI, Biden publicly stated on Wednesday that he will stick to the expectation of the Fed to cut interest rates and the Fed will cut interest rates before the end of the year. This statement is relatively rare. According to tradition, the White House usually does not comment on the Fed’s decision, and the President has previously promised to respect the independence of the Fed. Some analysts said that the higher-than-expected inflation data released on Wednesday for three consecutive months was disastrous for Biden, because high inflation and high unemployment rate often affect the president’s chances of re-election. His opponent Trump did not waste the opportunity to "bomb" him as the worst president in American history.
On the enterprise side, technology giants have successively launched their own AI chips to get rid of their dependence on NVIDIA, and the latest one is Meta. Meta Platforms announced the latest version of its Training and Reasoning Accelerator Project (MTIA) on April 10th, local time. MTIA is a custom chip series designed by Meta specifically for AI workload. Meta said that compared with the first generation MTIA, the latest version significantly improved performance and helped to strengthen the content ranking and recommendation advertising model. Meta said that the company’s goal is to reduce its dependence on companies such as NVIDIA.
NVIDIA also seems to be affected to some extent. On Wednesday, NVIDIA performed better than the US stock market, closing up nearly 2% against the trend. However, as an important driving force for the rise of US stocks since the beginning of the year, it once entered the technical adjustment zone this week, which deserves vigilance.
In addition, Apple’s "expansion of Zhang Zhilu" in India has received data feedback. According to informed sources, Apple currently produces about one-seventh of its global iPhone devices in India. It is worth mentioning that the latest Indian production data has doubled compared with a year ago. A report a year ago wrote that Apple assembled more than $7 billion of iPhones in India in fiscal year 2023, and produced nearly 7% of iPhones in India.
[Hot American stocks]
Among the popular US stocks, Microsoft fell 0.71%, Google A fell 0.29%, Amazon rose 0.15%, Apple fell 1.11%, AMD fell 2.13%, Arm Holdings fell 1.29%, Nye soared 0.06%, and Intel fell nearly 3%.
Among the seven giants, Tesla fell by nearly 3%, with the largest decline. NVIDIA fell by nearly 2% at the beginning of the session and closed up by nearly 2%. Meta, which fell by more than 2% at the beginning of the session, turned up, and officially announced a new AI chip.
[global index]
In the European stock market, the FTSE 100 index rose slightly by 0.33% to 7961 points. The French CAC40 index fell slightly by 0.05% to 8045 points. Germany DAX index rose slightly by 0.11% to 18,097 points.
In Asian stock markets, the Hang Seng Index rose 1.85% to 17,139 points. The index of state-owned enterprises rose 2.06% to 6017 points. The Nikkei 225 index fell 1.29% to 39,050 points.
[Overseas Market China Index]
Overnight, Hang Seng Technology Index futures rose 2.21%, Nasdaq China Jinlong Index fell 0.39%, and FTSE China A50 Index fell 0.42%.
[China Stock Exchange]
In terms of popular Chinese stocks, Pinduoduo fell by 1.16%, TSMC rose by 0.56%, Weilai fell by 2.44%, Xpeng Motors rose by 0.99%, Alibaba rose by 2.21%, Baidu fell by 1.83% and Netease fell by 1.11%.
[foreign exchange commodities]
The US dollar index surged above the 105 mark and finally closed up 1.043% to 105.2, the highest level since November last year.
Spot gold fell from a historical high, once falling about $40 from the daily high, and finally closed down 0.79% to $2,333.73 per ounce; Spot silver fell below the 28 mark and finally closed down 0.9% at $27.9 per ounce.
International crude oil rebounded. WTI crude oil rose rapidly after the daily low, and finally closed up 1.31% to $86.35/barrel. Brent crude recovered 90 mark, closing up 1.38% to 90.65 USD/barrel.
[Highlights]
The US CPI data in March exceeded expectations, and the Federal Reserve may postpone interest rate cuts.
In March, the consumer price index (CPI) in the United States increased by 3.5% year-on-year, exceeding the expected 3.4%, and the core CPI was also higher than expected for the third consecutive month, reaching 3.8%, which strengthened the market’s expectation that the Fed would postpone interest rate cuts.
Biden rarely expressed his position on the Fed’s monetary policy.
The CPI of the United States in March was higher than expected for three consecutive months, which hit Biden’s re-election prospects. In this regard, Biden publicly stated on Wednesday that he insisted on the expectation of the Fed to cut interest rates, and the Fed will cut interest rates before the end of the year. This statement is relatively rare. Because according to tradition, the White House usually does not comment on the Fed’s decisions, and the President has promised to respect the independence of the Fed.
Trump shelled Biden: the worst president in American history
On Wednesday (April 10th) local time, former US President Donald Trump once again attacked his old rival and current US President Biden because the latest inflation data was higher than expected. Trump called Biden the worst president in American history.
The minutes of the Federal Reserve show that it is appropriate to reduce interest rates this year and consider slowing down the pace of table contraction.
The minutes of the Fed meeting show that almost all the participants think that it is appropriate to cut interest rates this year, and are prepared to slow down the pace of reducing the holdings of national debt quite quickly, possibly reducing the monthly shrinking rate by about half.
NVIDIA once entered the technical adjustment zone.
Chip manufacturing giant NVIDIA’s share price has been weak recently. As of Tuesday, it has fallen by more than 10% from the previous record closing price of $950 set on March 25th, and entered the "technical adjustment zone". If calculated by intraday point, Tuesday’s intraday low of $830 was nearly 15% lower than the previous intraday high of $974 set on March 8.
Meta announced that the next generation AI chip project strives to reduce its dependence on NVIDIA.
Meta released the latest version of its AI training and reasoning accelerator project, aiming at improving performance and reducing dependence on external suppliers such as NVIDIA.
NVIDIA released LATTE3D model for 1 second to generate high-quality 3D effect.
NVIDIA released LATTE3D technology in its Toronto AI laboratory, which can efficiently generate 3D models through text prompts, and significantly improved the generation speed of 3D effects.
Apple is said to produce about 14% of iPhone in India.
According to reports, in India’s fiscal year 2024, Apple has assembled an iPhone worth $14 billion in the country. The fiscal year of the Indian government usually begins on April 1 and ends on March 31 of the following year. According to informed sources, Apple currently produces about one-seventh of its global iPhone devices in India.
It is worth mentioning that the latest Indian production data has doubled compared with a year ago. A report a year ago wrote that Apple assembled more than $7 billion of iPhones in India in fiscal year 2023, and produced nearly 7% of iPhones in India.
Pfizer announced the success of the third phase trial of RSV vaccine in high-risk population aged 18-59.
Pfizer’s RSV vaccine Abrysvo has shown positive results in the third phase of clinical trials for high-risk population aged 18-59, and it is expected to submit a vaccine marketing application for this population.
[financial calendar]
