#美国贸易赤字状况 How to Play the Market Expectations of a Fed Rate Cut? Watch How CPI Data Moves the Stock Market Sentiment

A question that has been troubling investors: why do US economic data releases have such a strong impact on our investments? The answer is simple—because of interest rates.

Today, the US CPI data will be released, and the market is eagerly awaiting it. Essentially, this data is asking one question: Is inflation still present? If the answer is "yes," the Federal Reserve will need to continue maintaining high interest rates to combat it; if inflation cools down, then the likelihood of rate cuts increases significantly.

This chain of logic is quite straightforward:
**Inflation Data → Federal Reserve Interest Rate Policy → Valuations of Tech Stocks and Risk Assets**

Currently, the market is focusing on two figures—overall CPI and core CPI (excluding volatile items like food and energy). Expectations are around 2.7%. Last month, core CPI was 2.6%, which was seen as "good news" by the market. So, the key question this time is—can inflation continue to cool?

There are three possible scenarios, let’s break them down:

**Scenario 1: Core CPI ≤ 2.6%**

This is the dream scenario for bulls. The lower the data, the more credible the story of cooling inflation. The market will immediately bet on the Fed acting sooner and accelerating rate cuts. A low-interest-rate environment is most friendly to tech stocks—why? Because tech companies earn slowly and must rely on future growth to support valuations, which are higher when interest rates are lower. At this point, risk assets could rally across the board.

**Scenario 2: Data remains at 2.7%**

No change, no surprises. This outcome is actually a "balance"—inflation has not rebounded, aligning with the Fed’s target, but it’s not particularly surprising either. In the short term, market reactions might be limited as the news is already priced in, and investors will also be watching earnings reports from major banks like JPMorgan and Goldman Sachs to gauge the true state of the economy.

**Scenario 3: Core CPI ≥ 2.8%**

This is the scenario most favorable to bears. Higher-than-expected inflation indicates stronger inflation stickiness, and the Fed might "change its mind," maintaining high interest rates for a longer period. Tech stocks will face the greatest pressure—because high rates directly undermine their valuation logic. At this point, risk asset market sentiment will turn notably colder.

Ultimately, whether rates are raised or cut has a huge impact on our investment portfolios. Paying attention to this data is essentially preparing in advance for the next market move.