New York·Shanghai stock markets, U.S. 'rate gauge' inflation indices announced in succession

This week, investors in the New York market are expected to gauge the size of the September rate cut based on the August Producer Price Index (PPI) and Consumer Price Index (CPI) to be released on the 10th and 11th. With the labor market slowing and the market treating a September rate cut as a fait accompli, some have even suggested the possibility of a "big cut" (a one-time 0.5% percentage-point rate cut). That underscores the high level of interest in the inflation data.

According to the CME's FedWatch, in the federal funds futures market the probability of the U.S. benchmark rate being cut by 0.75% percentage points by December this year is 65.3%, and the probability of a 1% percentage-point cut is 7.7%.

Gregory Rafanello, head of U.S. rates at Amerivet Securities, said, "It is true that the inflation rate is above the Federal Reserve (Fed)'s target, but the market is paying more attention to labor market trends than anything else," adding, "The situation could change in a few months, but that is the current mood." According to financial information firm FactSet, August CPI is estimated to have recorded a 2.9% year-on-year rise. Core CPI, which excludes volatile food and energy, is estimated to have risen 0.3% month-on-month and 3.1% year-on-year.

This week, China's stock market is expected to be driven by government moves to regulate the stock market. Last week the Shanghai Composite Index fell 2.5% on regulatory concerns, marking its largest weekly decline in four months. Although Chinese authorities have not yet announced specific measures, the market is showing caution. Steven Innes, managing partner at SPI Asset Management, analyzed, "Whether the sharp drop in China's stock market is temporary will depend on the concrete economic indicators to be released."

Various indicators are also in focus. On the 8th, China's August trade balance will be released, and on the 10th, consumer and producer price indices will be announced.

New York = Park Shin-young, correspondent nyusos@hankyung.com Choi Man-su, reporter bebop@hankyung.com