Late at night, a frenzy suddenly disappeared

——CPI pulled the market back from the brink of danger, but did not lead it into a new frenzy.

Wednesday’s market performance can be summed up in one sentence: reversal, reversal, another reversal, and finally no movement.

- U.S. stocks were mixed, with the Dow Jones Industrial Average down 0.04%, the S&P 500 up 0.26%, and the Nasdaq up 0.54%;

- Gold prices surged and then pulled back again, but closed above $4,400;

- The U.S. Dollar Index fell first and then rose, briefly reaching the 100 level during the session;

- The 10-year U.S. Treasury yield briefly declined after CPI, then returned to around 4.68%.

Let’s use gold as an example again.

In the first minute after the U.S. CPI data was released last night, gold prices fell nearly $50. But starting in the second minute, they reversed, not only recovering all the losses but also setting a new high for this rally. In the second hour after the data release, prices reversed again, giving back all the gains made after the release.

Other markets broadly followed the same pattern, and ultimately we saw this picture—stocks could not move higher, gold could not push higher, the dollar could not move lower, and Treasury yields could not decline either. The data was positive, but prices did not respond in proportion to the strength of the positive news.

The “strange” thing this time was that CPI clearly pushed down the most direct rate-hike warning (the number of rate hikes expected this year fell from two to one). A frenzy should originally have followed, but the market did not carry the “cooling inflation trade” through to the close. During the first hour, the market believed the CPI data; over the next few hours, it began to question whether a single mild CPI reading was really enough to solve the problems facing the market.

The most concerning figure is 4.68% (the 10-year U.S. Treasury yield), not the 0.26% gain in U.S. stocks (the S&P 500)—no matter what happens, it is difficult for long-term Treasury yields to come down. If even a mild CPI reading cannot truly push the 10-year yield away from 4.70%, then there is more to the story at this level than expected. It can even be understood as “all the alarms have been temporarily lifted, but no market truly believes it.” CPI resolved the question of “whether the Federal Reserve needs to raise rates immediately,” but did not resolve the question of “why are long-term Treasury yields so high?”

Looking again at U.S. stocks, there was hardly any excitement. With the rate-hike risk pushed aside, such a major positive catalyst produced only a small gain—good news is increasingly unable to drive prices higher. More subtly, the market is not currently too frightened. On the contrary, the VIX has already fallen to around 14, and the market is showing almost no panic. With no panic, a lower rate-hike probability, and CPI in line with expectations, U.S. stocks still rose only slightly.

If PPI is again below or in line with expectations tonight (20:30 Beijing time), while U.S. stocks show the same reaction, it will require close attention.

PS: Today we released “Gold Notes: Greed Is Near.” Recently, this report underwent two important upgrades:

First, we added the “Gold Tactical Map,” which presents the tactical framework for the gold market on the day, helping readers quickly identify the direction, distinguish key price levels, clarify the trading path, and prepare in advance for major event-driven moves.

Second, we further optimized the price calculation model, narrowing the gap between the daily projected highs and lows and actual market movements, and improving the accuracy and practicality of range assessments.