Prior to the release of CPI, the probability of the Federal Reserve raising interest rates by 25 basis points in September on Polymarket rose to 61%, with an increase of 8% in 24 hours; The probability of remaining unchanged drops to 40%, with a decrease of 8% within 24 hours. The US Department of Labor will release August CPI data tonight at 20:30 (UTC+8). The market expects the overall CPI to rise by 0.4% month on month and 3.4% year-on-year, while the core CPI is expected to rise by 0.2% month on month and 2.4% year-on-year. The last time the Federal Reserve raised interest rates was on July 26, 2023, with a 25 basis point hike, raising the target range for the federal funds rate to 5.25% -5.50%. (Source: Federal Reserve)
AI interpretation: On the eve of the release of CPI data, the market significantly raised expectations of interest rate hikes through gambling platforms, reflecting investors' extreme anxiety about the rebound of inflation. This emotional fluctuation directly increases the sensitivity of short-term interest rate pricing, indicating that the market's confidence in the Fed's policy shift is wavering. The current flow of funds indicates that risk aversion is dominant, and investors are hedging against the risk of inflation exceeding expectations by betting on interest rate hikes. This drastic adjustment in expectations indicates that the financial market will face significant volatility pressure after tonight's data release.
