SignalPlus Macro Research Report (20231213): Inflation has declined moderately, and the crypto market may bottom out again

“Recovery,” “Stability,” and “Slightly Decline.” These were the headlines of the three mainstream media about CPI data yesterday. Basically, CPI met some of everyone’s expectations. However, if we delve into the details, this data may More on the strong side.

In November, the overall CPI increased by 0.1% month-on-month, and the core CPI increased by 0.3% (both strong), while the annual CPI growth slowed to 3.1% (base effect), and the core CPI annual growth remained stable at 4.0%. The weakness in prices was mainly concentrated in Energy (-2.3%), gasoline (-6%), while services (+0.5%), housing (+0.4%) and housing costs (+0.4%) continue to drive CPI growth. In addition, the super previously preferred by the Federal Reserve The core index (services excluding energy and housing) still maintained a month-on-month growth of 0.44%, which is still much higher than the pre-epidemic standard.

In short, we continue to see the same trend: core goods prices remain soft, while services remain in the 3 – 4% range, providing just enough room for the Fed to “expect” price inflation to continue to cool to 2% There is room, however, given lingering core and super-core inflationary pressures, and we think there is an opportunity for the Fed to sound more hawkish than markets are currently anticipating.

Both bonds and stocks experienced back and forth fluctuations around the CPI data, but liquidity began to show early signs of weakening during the holidays, and risk assets finally closed higher; as for todays FOMC meeting, although the Federal Reserve may be dissatisfied with the rapid easing of financial conditions, it considers It will be difficult for Powell to convey the hawkish argument that the committee may need to lower its inflation forecast and dot plot median. Additionally, signs of a slowing economy combined with disappointing hard data may also convince the Fed to consider bringing forward insurance measures. Cut interest rates even before inflation falls significantly to the 2% target.

In short, Powell will struggle to fully qualify as a hawk in todays session, which should have a better chance of tilting toward the dove side.

In terms of cryptocurrency, there was not much progress in the market after the small flash crash of BTC on Monday, and the price was in consolidation. However, referring to the trend of gold price, it fell sharply after breaking through the historical high of $2,130, and then continued to fall back to $1,980. We expect cryptocurrency prices to continue to consolidate at current levels, with some opportunities to move lower, and implied volatility to begin to fall from recent highs. As we are about to enter the year-end holiday period, it is recommended to hold positions cautiously.

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