CPI sets the direction, while Waller sets the pace

Many people believe CPI is the biggest event of the week, but what truly affects the market is Waller’s answers in Congress after CPI. The data tells the market what is happening, while Waller tells the market how the Federal Reserve is planning to act. If inflation remains stubbornly high, Waller may stress the importance of controlling prices, thereby reinforcing expectations that high interest rates will be maintained for longer; if inflation cools, he may also send more balanced policy signals, leaving room to adjust policy in the future. Therefore, it’s the combination of the two that is the real core variable driving asset prices. Historical experience shows that changes in the wording of Federal Reserve officials often amplify the market reaction caused by the data itself. This hearing takes place almost in sync with CPI, leaving the market virtually no time to reabsorb the information, so volatility may rise noticeably. For investors, rather than trying to predict short-term market moves, it’s better to focus on whether Waller changes his description of inflation and interest rates—this could determine the market’s direction over the coming weeks. #沃什听证会撞上CPI