Looking back at the 2024 market trend, the regularity of the US CPI release schedule actually has a significant impact on the market. Usually, the latest data is announced around the first business day of each month, typically between 8:30 PM and 9:30 PM Taiwan time, and this timing often brings considerable volatility.

Last year, we spent a lot of effort studying the differences between CPI and PCE. Simply put, CPI includes food and energy, while PCE better reflects consumers' actual substitution behaviors. At that time, the market was most focused on the US CPI year-over-year growth rate because it was released earliest, whereas the Federal Reserve mainly looks at PCE for decision-making. These two indicators generally point in the same direction, but their influence on the market differs.

Looking at CPI components, housing costs account for the largest share (30-40%), followed by food and beverages. These two are key indicators for observing inflation. Energy costs also drew attention during that period because fluctuations in crude oil prices directly impact overall prices.

Two main factors will influence CPI trends in 2024. First, the US presidential election—regardless of the candidate, there’s a tendency to externalize internal conflicts, leading to increased geopolitical tensions. Second, the Federal Reserve’s rate cut pace—market expectations at the time were for a 6 basis point cut within the year. These factors combined essentially determine a downward trend for CPI throughout the year.

Historically, US CPI has experienced four major swings. The savings and loan crisis in the 1990s, the dot-com bubble in 2000, the 2008 subprime mortgage crisis, and the COVID-19 pandemic shock in 2020. Each decline in CPI corresponded with an economic crisis, and each rise was associated with price stabilization after economic stimulus. The 2020 wave was particularly notable—COVID-19 caused CPI to drop rapidly, but after large-scale Fed stimulus, it rebounded quickly to a high in 2022.

There was also an often-overlooked factor—global logistics. The Red Sea crisis disrupted Asia-Europe shipping routes again, causing freight rates to more than double. Although the impact was not as severe as the Suez Canal incident at the end of 2020 or in 2021, regional logistics disruptions eventually reflected in consumer prices.

From a fundamental perspective, the US economy’s growth rate in 2024 is expected to remain around 2.1%, ranking second among major global economies. This suggests that inflation levels are unlikely to decline significantly. Due to commodity price fluctuations in the first half of 2023, CPI in the first half of 2024 will not continue to fall rapidly because of low base effects, and with declining crude oil inventories, oil prices will have support.

Overall, it is expected that US CPI will bottom out in the first quarter of 2024, rebound in the second quarter, and then decline again in the second half of the year. This rhythm is mainly influenced by the US election, Federal Reserve decisions, and geopolitical tensions. Throughout the year, CPI is likely to trend downward, which indeed puts pressure on US stocks.

Looking back now, the timing of CPI releases is definitely an important event that traders must mark on their calendars. Each release of US CPI data can move global asset prices, especially during shifts in economic expectations.