While I was writing this week’s macro framework, I suddenly

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While I was writing this week’s macro framework, I suddenly thought of something interesting. If this week’s CPI and PPI raise the probability of a September rate hike again,

stocks will fall, short-term bond yields will keep rising, but long-term bonds will still be ignored. With these data, would Voith really dare to hike rates?

Especially if the U.S., Japan, and Europe all raise rates in September, it won’t just deepen the K-shaped economic divergence—it could also put global risk assets under pressure, disrupting the stability of financial markets. Even tech stocks won’t be able to withstand the pressure.

At the same time, Trump also has to consider the midterm election. If he allows the stock market to be under such pressure at this time, will Trump perhaps miss Chef Bao from the days by Minghu Lake? #美伊互袭油轮冲突升级

Cato_KT

Sept 7—Sept 13 Global Macro Outlook: the final judgment on inflation! Oil prices are approaching $100, and the U.S., Europe, and Japan are entering a “rate-hike resonance week”

Sept 7—Sept 13 Global Macro Outlook: the final judgment on inflation! Oil prices are approaching $100, and the U.S., Europe, and Japan are entering a “rate-hike resonance week”

Compared with the complex macro environment of the past few weeks, this week’s macro main theme is very simple and clear. Last week was about whether employment could prevent a September rate hike; this week is about whether the inflation data will firmly lock in September rate-hike expectations.

This week’s macro logic chain: U.S.-Iran conflict → crude oil → global inflation → central banks in the U.S./Europe/Japan → global interest rates → liquidity → risk assets

First, the August CPI and PPI data determine whether the September rate-hike expectations are locked in!

Before last week’s employment data, the market was wondering whether weak jobs could weaken the probability of a September rate hike, but what was released was an extremely strong employment report—this has flipped the logic of offense and defense for this week.

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