Events
On April 12 local time, the latest data released by the U.S. Department of labor showed that in March, the U.S. consumer price index (CPI) rose by 8.5% year-on-year, is expected to rise by 8.4%, and the previous value rose by 7.9%. The year-on-year increase continued to set the highest record in 40 years; CPI rose 1.2% month on month. Excluding volatile food and energy prices, core CPI rose 0.3% month on month in March; The year-on-year increase was 6.5%, the largest year-on-year increase since August 1982.
Comments
Rising energy prices are still the main reason for high inflation in the United States. According to the data of the U.S. Department of labor, the U.S. energy price rose 11% month on month and 32% year-on-year in March. Among them, gasoline prices rose by 18.3% month on month and 48% year-on-year. In the first quarter of this year, the price of bulk commodities dominated by oil rose sharply. Among them, the contract of us oil in May 2022 increased by 34.56% in the first quarter; The oil distribution contract in June 2022 increased by 35.83% in the first quarter. In terms of supply, the escalation of the conflict between Russia and Ukraine affects the import and export transactions of energy, and the market is not optimistic about the prospect of crude oil supply. In March, OPEC's oil production increased by only 90000 barrels per day to 28.6 million barrels per day, far less than the previous production increase target of 253000 barrels per day set by the organization. In terms of demand, the strong demand for tourism in the United States, coupled with the sustained economic recovery, supports the warming of energy demand. In the short term, the dilemma of energy supply and demand imbalance is difficult to solve. However, it should be noted that with the easing signal of the conflict between Russia and Ukraine and the accelerated release of crude oil reserves by the International Energy Agency to support crude oil supply, international oil prices may return to rationality in the medium and long term.
Food prices and housing costs increased month on month, and the price of second-hand cars decreased slightly month on month. According to the latest data from the U.S. Department of labor, food prices rose 1% month on month and 8.8% year-on-year in March, the largest year-on-year increase in four decades. Affected by the conflict between Russia and Ukraine, the global food supply chain has been impacted. According to the latest data of FAO, the average value of the global food price index in March was 159.3, the highest since the establishment of the index in 1990, with a month on month increase of 12.6% and a year-on-year increase of 33.6%. In addition, the cost of living increased by 0.5% month on month and 5% year-on-year in March. Used car prices fell 3.8% month on month in March, up 35.3% year-on-year.
The first interest rate hike did not significantly improve the current situation of US inflation, or ushered in an inflection point in the third quarter. Considering that the impact of labor shortage, supply chain bottlenecks and rising commodity prices may last for a long time, it will further worsen the inflation situation in the United States. If the Fed still wants to achieve the goal of controlling inflation within a reasonable range within this year, or implement more aggressive monetary policy. At this stage, the possibility of the Federal Reserve raising interest rates by 50 basis points after the may interest rate meeting is increasing, and it may raise interest rates seven times in the year. In terms of reducing the balance sheet, the Federal Reserve may reduce its balance sheet by US $95 billion per month as soon as possible after the interest rate meeting in May, so as to effectively curb the upward trend of inflation.
Risk tip: the economic growth is lower than expected, the spread of trade protectionism, and the Fed's policy is higher than expected.
