Beyond expectations! Gold and the US dollar surged! September CPI showed inflation slightly exceeded expectations

On October 10 (Thursday) local time, the three major U.S. stock indexes fell slightly. As of the close, the Dow fell 0.14%, the Nasdaq fell 0.05%, and the S&P 500 fell 0.21%.

The latest data shows that the rise in core inflation in the United States in September exceeded expectations. The U.S. Department of Labor announced on Thursday that the CPI rose 2.4% year-on-year, higher than market expectations, and the core CPI rose 3.3% year-on-year, also exceeding expectations. Higher-than-expected inflation data, coupled with last week's strong U.S. non-farm payrolls report, may provide a reason for the Federal Reserve to slow down the pace of interest rate cuts.

September CPI shows inflation slightly higher than expected

On October 10 (Thursday) local time, data released by the U.S. Bureau of Labor Statistics showed that the U.S. unadjusted CPI annual rate in September was 2.4%, the sixth consecutive month of decline, the lowest since February 2021, mainly due to falling energy prices. But it is higher than the market expectation of 2.3%, the previous value of 2.50%; the seasonally adjusted CPI monthly rate is 0.2%, the expected 0.1%, and the previous value is 0.20%.

The annual rate of the unadjusted core CPI in September was 3.3%, the highest since June, higher than the market expectation of 3.2% and the previous value of 3.20%; the monthly rate of the core CPI after seasonal adjustment was 0.3%, expected to be 0.2%, and the previous value was 0.30%. The increase in the core inflation rate in the United States in September exceeded expectations, indicating that the recent process of easing price pressures has paused.

Another data showed that the number of first-time unemployment claims in the United States last week rose to the highest level in more than a year, reflecting a sharp increase in the number of unemployment claims in Michigan and the impact of Hurricane Helen on some states.

The U.S. Department of Labor reported that the number of first-time unemployment claims increased by 33,000 in the week ending October 5, and the total number increased to 258,000, the highest level since August 2023. The median forecast of economists surveyed earlier was 230,000.

The number of people who continued to apply for unemployment benefits increased to 1.86 million in the week ending September 28.

After the release of the US CPI data, the market fluctuated violently, and the short-term fluctuation of spot gold reached $17, refreshing the intraday high. The US dollar index once touched the 103 mark.

Institutional analysis shows that traders have slightly increased their bets on the Fed's 25bp rate cut in November, but they have not yet fully digested this. The series of data in the United States sent mixed signals, and traders weighed labor market concerns against inflation, trying to judge which one the Fed will prioritize. The subconscious market volatility highlights the risks of making assessments based on a single initial jobless claims data, especially given the recent strong performance of the non-farm payrolls report.

Fed officials will meet again next month, and Thursday's CPI and Friday's PPI data will play an important role in their decision on how to deal with interest rates. Over the past year, inflation has been on a downward trend, and the once weak labor market has attracted the attention of the Federal Reserve. However, last week's strong non-farm data eased concerns about the job market, making the timing and speed of the Fed's future rate cuts an open question.

The Federal Reserve's "third-in-command", New York Fed President John Williams, recently said that given the better balance of risks to achieving inflation and employment goals, policymakers should lower interest rates to a more neutral level "over time."

Richmond Fed President Thomas Barkin expressed optimism about progress in curbing inflation, but said the fight is not over. He mentioned potential risks that could exacerbate price pressures. "We are definitely moving in the right direction," Barkin said at an event hosted by the Virginia Maritime Association on Thursday, adding that "I won't declare victory."

When asked about factors that may make inflation sticky, Barkin mentioned conflicts in the Middle East and the possibility that housing demand may exceed supply as the Fed cuts interest rates.

In the early hours of Friday morning Beijing time, Nick Timiros, a well-known macro journalist known as the "Federal Reserve mouthpiece," posted an article saying that Raphael Bostic, a voting member of the Federal Open Market Committee in 2024 and president of the Atlanta Fed, revealed in an interview on Thursday that he was open to not cutting interest rates at the November meeting, or only cutting them by 25 basis points, depending on the development of the economic outlook.

Bostic said: "If the data shows that it is appropriate, then I am completely okay with skipping the next meeting."

Peter Cardillo, chief market economist at Spartan Capital Securities in New York, said: "I think the Fed has been too hasty before (cutting interest rates by 50 basis points), and if you look at the minutes, you will know that they are definitely divided on this point. I don't think the market will collapse, but today's CPI inflation data may erode positive market sentiment."

Portfolio analyst Ken Teyonasam said that the slightly higher-than-expected US CPI data "adds more uncertainty to the market." He said that inflation has proved to be more difficult than the Fed expected, especially in areas such as housing, health care and motor vehicle insurance. "While inflation has fallen from its peak, it has not cooled fast enough, which is the key issue." The strategist said that these data make it more difficult for the Fed to justify another 50 basis point rate cut this year.

U.S. stocks closed slightly lower on Thursday

The three major U.S. stock indexes fell slightly on Thursday local time. As of the close, the Dow Jones Industrial Average fell 57.88 points, or 0.14%, to 42,454.12 points; the Nasdaq fell 9.57 points, or 0.05%, to 18,282.05 points; and the S&P 500 fell 11.99 points, or 0.21%, to 5,780.05 points.

Tesla closed down 0.95%. On the news front, Tesla Robotaxi Day is about to open. The outside world expects to officially launch its highly anticipated driverless taxi Robotaxi. This is also the first time Tesla has held a product launch conference since the release of the Cybertruck electric pickup in 2019.

In addition, Tesla said on Thursday that it will provide permanent jobs for 500 temporary workers at its German super factory near Berlin from November 1, which the US electric car maker called "an optimistic assessment of the further development of electric vehicle production."

Nvidia closed up 1.63%. Nvidia held a three-day AI roadshow in New York on Tuesday, with CEO Jensen Huang and CFO Colette Kress and other members of the management team in attendance. The company's management was enthusiastic about the short-term and long-term prospects of AI, especially innovation and expansion in AI computing, emphasizing that there is still substantial growth to come.

Morgan Stanley analysts saw more signs of sustainable demand after meeting with Nvidia's management team, and their optimism is pushing Nvidia's stock price closer to its all-time high and may even break through this level.

AMD fell 4%, with its stock price falling the most in more than a month after the company released a new artificial intelligence (AI) chip but did not provide the information investors were looking for in terms of customers or financial performance.

The Santa Clara, California-based company is working to break Nvidia's dominance in AI accelerator chips. Such chips have become critical to the development of AI systems. Both AMD and Nvidia have promised to launch new accelerators every year to accelerate the pace of innovation.

Apple closed down 0.22%. On the afternoon of October 10, the application research laboratory established by Apple in the Hetao Shenzhen Park was officially completed and put into operation. As Apple's most extensive laboratory outside the United States, the laboratory is expected to invest more than 1 billion yuan to develop a research and development team of more than 1,000 Chinese and foreign high-end talents.

The laboratory is positioned as Apple's Greater Bay Area R&D center, mainly engaged in hardware development, intelligent manufacturing and joint R&D business with local suppliers, and will enhance the testing and research capabilities of products such as iPhone, iPad, Apple Vision Pro, etc.

Amazon closed up 0.80%. Amazon will announce its third-quarter results for fiscal 2024 on October 25. Analysts say the market is likely to see another earnings beat. In addition to this potential bullish catalyst, management is unlikely to make negative comments, and the current undervalued stock price should provide good incentives for further growth in the medium term.

Chinese stocks rose slightly, with the Nasdaq China Golden Dragon Index up 0.3%. Faraday Future rose more than 12%, Yatsen E-Commerce rose more than 7%, Hesai rose more than 5%, Ctrip, Miniso, and Good Future rose more than 2%, Gaotu, Weibo, Tencent Music, and Alibaba rose more than 1%, JD.com, Xiaopeng Motors, Waterdrop, ZTO Express, New Oriental, and Pinduoduo rose slightly; Fangduoduo fell more than 30%, Zhihu, iQiyi, and Ideal Auto fell more than 3%, Bilibili and Dingdong Maicai fell more than 2%, Sohu, Manbang, SoYoung, NetEase, and Weilai fell more than 1%, and Tuniu, Monster Charging, Vipshop, and Beike fell slightly.

Xpeng Motors once rose nearly 5% at the beginning of the session, and as of the close, the increase narrowed to 0.88%. On the news front, on October 10, Xiaopeng P7+ officially debuted. At present, the exhibition cars have arrived at various stores across the country one after another, and will start pre-sale at the Paris Motor Show on October 14; in early November, P7+ will be available for delivery after listing. He Xiaopeng, chairman and CEO of Xiaopeng Motors, revealed that the Xiaopeng P7+ is positioned as a coupe SUV priced under 300,000 yuan, and will be equipped with two NVIDIA OrinX chips as standard to support the "AI Eagle Eye Vision Intelligent Driving" solution. In addition, Xiaopeng Motors announced that its September deliveries also set a record high of 21,352 units. Among them, MONAM03 delivered more than 10,000 units in the first month, setting a record for the first-month delivery of new pure electric vehicles.

In addition, on the eve of Tesla's official release of the driverless taxi (Robotaxi), Xiaopeng Motors started recruiting for the Robotaxi operation team. According to the recruitment platform information, Xiaopeng Motors is recruiting Robotaxi operations director and Robotaxi senior product operations manager. Among them, the monthly salary range of the Robotaxi operations director is 40,000 to 60,000 yuan, and 15 months of salary can be paid each year, with an annual salary of nearly one million yuan; the monthly salary range of the Robotaxi senior product operations manager is 30,000 to 40,000 yuan, and 15 months of salary can be paid each year.