The Fed braces for 8.8% inflation, investors avoid risk assets and seek safe havens. Wall Street stocks continued to weaken, but yield on UST10Y was stable below 3% with an inverted yield curve (Vs. UST2Y 3.05%). Investors are also interested in the safe haven USD, with DXY hitting its highest level at 108.07 again. June US Headline CPI monthly and yearly is projected at 1.1% (Vs. May 1.0%) and 8.8% (Vs. May 8.6%), in line with higher fuel, gas and electricity costs. Meanwhile, core inflation CPI Ex. Food and Energy June monthly and yearly are projected to slope, by 0.5% (Vs. May 0.6%) or 5.7% (Vs. May 6.0%), indicating confirmation that inflation has peaked, confirming the monetary policy of The Fed will be more relaxed in the fall or September.
BI RDG, which is a week earlier than the FOMC meeting, makes investors tend to wait and see. JCI predominantly moved in the green zone, before finally closing slightly lower by 4 points to the level of 6,718 yesterday. Meanwhile, Healthcare and Consumer Non-Cyclicals led the sectoral decline. Apart from waiting for data on US inflation in June at the consumer and producer levels, which are projected to remain high, investors’ wait-and-see attitude is due to developments on a number of issues at the BI RDG on Thursday the third week. Meanwhile, the potential for US inflation to remain high, has the chance to make the Fed raise the FFR between 50 bps – 75 bps at the end of July. In the midst of a number of sentiments, NHKSI Research projects the JCI to move upward in the range of 6,650-6,800.
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