The Impact of Lower Core CPI on the Stock Market and Financial Markets

An unexpected decline in core CPI often has a significant impact on financial markets. First, from a stock market perspective, cooling inflation reduces the pressure for policy tightening, thereby benefiting risk asset prices. Past data shows that when core inflation decreases and market expectations favor easing interest rates, stock markets tend to react positively because lower funding costs imply better future corporate profits.

For example, after recent data releases, the three major U.S. stock indices experienced positive volatility — indices like the S&P 500 rose on optimism about rate cuts. Meanwhile, bond market yields typically fall due to expectations of rate cuts; long-term bond prices rise and yields decline, reflecting investors’ bets on future policy easing.

For precious metals like gold, slowing inflation usually means declining real interest rates, which enhances their appeal as safe-haven assets. Therefore, when core CPI drops, gold prices often receive support. In specific market movements, some precious metals and safe-haven assets saw short-term gains after data releases, reflecting market reactions to easing inflation.

However, this positive trend may not last. Markets often anticipate policy changes in advance, and short-term movements may reflect “expectation adjustments” rather than long-term trends. If future data stops improving or if the employment market behaves abnormally, funds may quickly revise risk preferences. Therefore, investors should cautiously interpret the impact of core CPI data on the market and avoid viewing a single indicator as a universal signal.#美国核心CPI创四年新低