Recently, there has been a strong bullish atmosphere in the commodity market, and the prices of most commodities have reached record highs. Just as the market was immersed in it, the US CPI data for April was released yesterday evening. The prices of most commodities turned downward, and a bearish atmosphere suddenly emerged.
It is reported that the U.S. CPI increased by 4.2% year-on-year in April, and is expected to increase by 3.6%. The previous value increased by 2.6%, a new ten-year high. Previously, the consensus forecast for core CPI in April was to increase by 0.3% month-on-month, which is the first time since 1999 that it has exceeded 0.2%. U.S. inflation data surprised the market by exceeding expectations, which will continue to test the Fed’s resolve. The Fed has repeatedly emphasized that inflation data and employment data are related to whether to raise interest rates in the future. Previously, when the employment data was significantly lower than expected, the entire financial market (including commodities) experienced a strong rebound because the market expected the employment data to be lower than expected, indicating that the Federal Reserve would not tighten monetary policy in the short term. Now when the inflation data is significantly higher than expected, the pressure to raise interest rates has increased significantly, and the overall market atmosphere has turned bearish.
The author believes that according to the predictions of most institutions and experts, the probability of the Federal Reserve raising interest rates this year is zero, and it will not be until early next year at the earliest. Therefore, with about half a year left, Raising interest rates is just a sword of Damocles hanging over the head. Although the danger is always present, it will not fall for the time being. This is equivalent to giving the market a chance to breathe. Of course, the most critical thing is the supply and demand relationship of the commodity itself.
Take cotton as an example. The current supply side remains normal and the inventory is still large. The new season’s cotton has been sown, and new cotton has emerged one after another. Recently, some extreme weather has occurred. Some cotton fields have been affected, and cotton prices have experienced large fluctuations. Anyone familiar with cotton cultivation in Xinjiang knows that Xinjiang suffers from various meteorological disasters every year, but the severity of the disasters varies. Of course, this weather speculation incident shows that as long as there are substantial changes in supply and demand, market prices will inevitably respond. .
At present, epidemic prevention and control in major global consumer markets such as Europe and the United States are gradually relaxing, factors affecting overslumping cotton prices are gradually being eliminated, and the future recovery of the consumer market is within expectations. In addition, as the world’s largest cotton producer, India, the epidemic is still out of control. It is difficult to predict how much impact it will have on cotton production and textile orders. There is still a subject for financial speculation. </p
