Post

In the "Tough Walsh" era, we need to readjust our perspective on data. What results do tonight's combined data—GDP, PCE, and personal consumption—bring to the market? 1. Walsh's policy stance advocates a 2% inflation target, cautious rate cuts, prudent use of monetary policy, downplaying the June CPI, and I even believe Walsh downplays all current market data unfavorable to his policy. 2. From this perspective, we cannot look at PCE alone; we must consider tonight's data comprehensively, prioritizing the structure of GDP data, then personal consumption, and only then PCE data, because the core support for Walsh's high interest rate policy depends on whether the economy is resilient enough. 3. Real GDP is 1.5%, nominally slightly weaker, but the actual consumption components remain strong. Consumption growth exceeded expectations, indicating that household demand has not collapsed and the economy remains resilient. This provides a foundational reason for Walsh to continue maintaining high interest rates. 4. Core PCE: the annual core PCE meets expectations and is slightly below the previous value; the monthly rate dropped significantly, below market expectations, which means short-term inflation concerns are alleviated. However, medium- to long-term inflation concerns remain, and inflation still maintains some stickiness. To weaken inflation worries, consecutive weakening data are needed. 5. Overall, tonight's data show the economy remains resilient, consumption supports the economy, inflation remains sticky, and short-term inflation weakening lacks sufficient evidence to change interest rate policy. Combined with Walsh's policy stance, this data weakens inflation concerns and high interest rate expectations, but whether it can reduce the likelihood of a September rate hike remains difficult at present. 6. Looking at market performance, the dollar is weak and gold is strong, indicating reduced concerns about high interest rates or rate hikes. However, the 1-year US Treasury yield remains high, and the market has not returned to rate cut expectations. The 1-year yield is declining, and the 10- and 30-year medium- and long-term bond yields are falling, showing weakening rate hike expectations. Both short-term and long-term inflation expectations are weakening. However, tonight's data clearly favor easing short-term inflation concerns, with the 10-year yield falling faster than the 30-year. The VIX index is down, the SPHB/SPHQ ratio rebounds, and US stock indices rebound, indicating increased short-term risk appetite. Rate concerns ease, combined with a rebound and recovery after US stock declines plus positive earnings reports driving the rebound. Overall, tonight's data are positive, but this positivity is still limited and cannot completely reverse the situation to bring back rate cut expectations. Moreover, Walsh's persistent distrust of current data invisibly weakens the positive effect brought by the data. The key this week remains earnings reports; macro data and geopolitical issues are weaker than earnings fundamentals! #美联储三票主张加息，今晚PCE成新看点