Late at night, after a 3-hour winning streak, the cheers suddenly stopped.

—Last night, the market chose to trust the data first; over the next few days, it will have to answer another question: whether it will start believing in oil prices again.

Financial markets are welcoming cheers once more:

- U.S. stocks rose across the board. The Dow Jones rose 0.02%, the S&P 500 rose 0.38%, and the Nasdaq rose 0.9%;

- Gold rebounded, briefly touching $4,100 during the session, but ultimately closed around the $4,050 level;

- The U.S. Dollar Index fell sharply during the day, but into the close it recovered nearly half of the losses;

- Oil prices continued to rise, with U.S. crude edging toward the $80 level; - U.S. Treasury yields rebounded: the yield on the 10-year Treasury fell below the 4.60% level and closed at 4.58%.

First, once again, the market displayed the classic pattern of “a falling dollar lifts everything.” It is clear the market is trading “a decline in rate-hike expectations.” The probability of a rate hike in July has already dropped to 16%. The dollar broke below 101; the yield on the 10-year Treasury broke below 4.60%—the alarm was downgraded to a warning, because there is still some distance before the two can confirm a trend reversal.

Second, the June CPI data in the U.S. has already been released—well below market expectations across the board. Even core inflation came in unexpectedly lower than expected—this is the most satisfying inflation report in the past few months, yet the market did not show the same level of excitement. The rise in U.S. equities does not match it: the Dow Jones barely moved up, and the Nasdaq’s gain is also less than 1%.

One more detail worth noting—gold surged and then pulled back. It once pushed up to $4,100, but at the close it fell back to $4,050. After the CPI release, gold prices kept rising for three straight hours, and then began to decline. The market is not blindly optimistic. On the one hand, the recent deterioration of the situation in the Middle East has caused the June data to lose some of its relevance. On the other hand, it is hard to read any “dovish tone” from Federal Reserve Chair Waller’s speech last night—market pricing still puts the probability of a rate hike in September at nearly 60%.

Many media outlets may misread this. They will say, “CPI is cooling down, so the Fed is reassured.”

Actually, no. Today, Wacsh still emphasized: Inflation is a choice (inflation is not a natural disaster—it is a policy choice).

Third, the biggest change on Tuesday is not whether any particular asset rose or fell, but that the market has returned to “data pricing,” and data has again become the market’s “first explanatory variable.”

Over the next few days, three variables need to be watched repeatedly:

Whether oil prices can truly hold above $80, and whether energy risk continues to transmit into inflation;

Whether the 10-year Treasury yield returns to above 4.6%, to verify whether the bond market has changed its view;

Whether the U.S. Dollar Index ends its adjustment and moves stronger again.

If all three move upward in sync, then the optimism brought by CPI may be only a brief pause in breathing. If they move up and down differently, the market has a chance to continue along the main line of “inflation cooling and risk appetite rebounding.”

Last night was not the endpoint—it was a new choice of direction.

Risk warning: This article is for analysis purposes only based on publicly available information and market data. It is for information exchange only and does not constitute any investment advice or any promise of returns. Financial markets involve risk; investment decisions must be made independently based on your own circumstances.