CITIC Securities: US inflation continues to be moderate, concerns about interest rate hikes are temporarily alleviated

According to the Zhitong Finance APP, Guotai Junan released a research report stating that the U.S. inflation data for July met expectations, showing a strong commodity sector while services remained stable, which alleviated some market concerns about a rate hike by the Federal Reserve in September. Currently, U.S. inflation continues to be moderate, but attention should still be paid to the impact of oil prices and resilient demand on the decline of inflation. If the August inflation data does not exceed expectations and U.S. employment maintains low growth, the Federal Reserve's wait-and-see window may be further extended, and it is still possible to keep interest rates unchanged in September.

Guotai Junan's main points are as follows:

July Inflation: As expected, it moderately slowed down. In July, the U.S. CPI year-on-year fell to 3.4% and month-on-month rose to 0.1%. The core CPI year-on-year remained at 2.5% and month-on-month rose to 0.2%, both in line with market expectations, maintaining an overall moderate trend. Among them, the energy component continued to show negative growth month-on-month, but due to the escalation of the U.S.-Iran conflict leading to a secondary rebound in oil prices, the month-on-month decline has significantly narrowed compared to June.

Core Inflation: Strong commodities, stable services. Most core commodities saw a rebound in month-on-month growth. First, the automotive component, as a cornerstone of core commodities, rebounded month-on-month, especially the used car component, which saw a significant month-on-month increase. Second, aside from the automotive component, furniture, clothing, and education and communication commodities also saw month-on-month increases. Overall, excluding used cars, the month-on-month growth rate of core commodities rebounded to around 0.2%, reversing the relatively weak situation since the second quarter. In contrast, core service inflation performed moderately overall. Among them, the housing component saw a slight month-on-month increase, still within a moderate growth range. Excluding the housing component, the month-on-month growth rate of core services increased by 0.2 percentage points to 0.2%, showing no signs of overheating. Notably, the month-on-month increase in airfares in July drove the month-on-month growth rate of transportation services up. Medical services and education and communication services also rebounded month-on-month, but the extent remained relatively controllable.

Federal Reserve: The wait-and-see window is expected to be further extended. Currently, U.S. inflation continues to be moderate; however, attention should still be paid to potential upward risks of inflation: First, if oil prices rise again due to disturbances in the U.S.-Iran situation, it may cause additional disruptions to the pace of inflation decline; second, with resilient demand in the U.S. and continued expansion of AI capital investment, caution is needed regarding the demand side's pull on U.S. core inflation. In the short term, the inflation data that met expectations has alleviated concerns about a rate hike by the Federal Reserve in September. The next inflation data before the September monetary policy meeting will still have a significant impact on market sentiment and the Federal Reserve's monetary policy. If the August inflation data continues the moderate trend and the U.S. job market maintains low employment growth, the Federal Reserve's wait-and-see window may be further extended, and it is still possible to keep interest rates unchanged in September.

Risk Warning: The ongoing stalemate in the Iranian situation has led to a secondary rebound in oil prices, and the Federal Reserve's hawkish tendencies may exceed expectations