February 10 tonight the US stock market has a look! Inflation data continues to explode? How will the market react? Is there a big mystery in the inflation data tonight? How will the market react? It is worth noting that in inflation

February 10 tonight the US stock market has a look! Inflation data continues to explode? How will the market react?

Is there a big mystery in the inflation data tonight? How will the market react?

It is worth noting that before the release of inflation data, the risk appetite in the financial market has improved significantly, with the three major US stock indexes rising for two consecutive days, the 10-year base bond yield losing the new 27-month high of 1.97% set yesterday, and the NASDAQ rose sharply by more than 2% throughout the day. Many people in the industry attribute these market changes to speculation by some institutions that tonight's CPI data may fall short of market expectations.

Mainstream Wall Street investment banks such as Bank of America, Deutsche Bank and JPMorgan Chase all believe that the US January CPI inflation released on Thursday is "likely to be lower than expected" and bullish on US stocks in the short term. If inflation is indeed weaker than expected, be prepared for drastic market changes, but higher than expected inflation will push the 10-year Treasury yield above 2%.

Of course, even if the CPI data is really weaker than expected, it is unlikely to fall back too much from the high of the past 40 years. The December CPI surged 7% year-on-year, the core CPI excluding food and energy increased by 5.5% year-on-year, and the market expected the core CPI to rise further to 5.9% year-on-year in January, all far exceeding the Fed's official target of 2%, and could not completely eliminate the possibility of a one-time sharp rate hike of 50 basis points in March to fight inflation.

Bank of America predicted that if the CPI data released was "not so scary," technology stocks would oversold and rebound.

Mike Feroli, JPMorgan's chief U.S. economist, noted that U.S. Treasury yields would fall if CPI fell below expectations, and growth stocks that had previously been valued could outperform the broader market. And if the CPI continues to rise above expectations, or even just flattens expectations, it could send the 10-year Treasury yield upwards to touch or break the 2% mark and continue to push the rotation of funds to value stocks.

Some analysts said that in addition to focusing on the 25 basis points or 50 basis points of the March rate hike, the market also wanted to know how long the Fed will start shrinking its balance sheet (reducing its bond holdings) after the first rate hike. If the January CPI data is higher than expected, the timing of quantitative tightening will only be much earlier.

Alvise Marino, head of foreign exchange strategy at Credit Suisse, said that if Thursday's CPI data unexpectedly fell short of expectations compared to inflation again, the market could react more strongly: a data pointing in the opposite direction would represent a huge change.

This round of inflation continues to soar above expectations, which has brought about a "sharp brake" on the Fed and led to a major adjustment in US stocks represented by technology stocks at the beginning of the year. Therefore, whether the inflation data exceeded expectations and whether there are signs of peaking is likely to become the key to guiding financial market expectations and assessing the Fed's inflation response.