SignalPlus Macro Research Report (20230711): US Inflation Slows, Cryptocurrencies Gain Favor

Contrary to the upward trend of inflation worldwide, China's CPI remained unchanged in June, and PPI further fell into negative territory. Early signs of deflation, combined with continued economic weakness, have intensified market expectations for immediate economic stimulus measures, pushing the USD/CNY exchange rate to its highest level since October, in contrast to the weakening trend of the USD against most major currencies.

In the United States, inflation data is also favorable, with Cleveland Fed's 10-year inflation expectations falling at one of the fastest rates in history (the fourth largest quarterly decline since 1980), and used car prices falling by 10.3% YoY, reaching the lowest level since mid-2021.

These data help lower market expectations for Wednesday's CPI data. The current market consensus is that core CPI will rise by 0.3% MoM and 5% YoY. Some institutions (such as Goldman Sachs) estimate that due to significant declines in car prices and housing inflation, core MoM growth will further decline to 0.2%.

The favorable data backdrop helped the global fixed income market experience a relief rebound after a recent sell-off, with the 5-year bond yield falling by 11 basis points and also supporting a slight increase in the stock market after a weak opening. In addition, summer trading has been relatively calm.

In terms of cryptocurrency, mainstream digital asset investment products received a capital inflow of $136 million, marking the third consecutive week of growth, helping to recover from the outflows observed in the previous two months; BTC remains the preferred choice among investors, occupying a dominant position of 67%, with the majority of the capital inflow still coming through Greyscale. Despite the continuous decrease in stablecoin balances and the recent decline in NFT activity volume/floor prices, cryptocurrency prices remain relatively stable. As we enter the summer, we expect prices to continue fluctuating within a range, with implied volatility remaining low.

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