Bitunix Analyst: Market Trades Not Just PPI Cool Down, But Energy Supply and Long-term Inflation Expectations

BlockBeats News, July 16th. In June, the US PPI was well below market expectations, indicating a temporary easing of upstream price pressures. However, Federal Reserve Chair Powell still clearly stated that single-month data is insufficient to reflect the true inflation trend and emphasized dissatisfaction with any inflation metric at the moment. New York Fed President Williams believes that the policy rate is still at an appropriate level, and any future adjustments will depend on subsequent data. This indicates that the Fed is currently unwilling to change its policy stance prematurely due to short-term inflation improvements, and the high-interest-rate environment will continue to suppress market liquidity.

On the other hand, the US-Iran conflict continues to escalate. The Trump administration is assessing expanding military actions, including targeting more Iranian energy facilities and strategic points around the Strait of Hormuz. The US military continues its operations against Iran, while Iran has stated that it has no plans for negotiations at the moment and continues to take military responses. Of particular note, the significant release of strategic oil reserves by the International Energy Agency is nearing depletion, reducing the market's ability to absorb new supply shocks.

What is truly worth paying attention to is not the daily fluctuation of oil prices but the decreasing safety margin in the global energy market. If the transportation through the Strait of Hormuz is blocked for an extended period again, even though oil-producing countries can still export through alternative routes, they will struggle to fully compensate for the global supply gap. Refined oil, transportation costs, and enterprise production costs may once again come under pressure, further fueling sticky core inflation in the coming months.

From a market pricing perspective, the cooling of the PPI helps reduce the uncertainty about near-term rate cuts. However, the bond market yield curve continues to steepen, indicating that funds do not believe the inflation issue has ended but are reassessing energy supply risks, fiscal deficits, and long-term price pressures. The market's focus will gradually shift towards end-of-month PCE data and the evolving situation in the Middle East. If energy prices remain elevated, the Fed may maintain its tightening policy or even retain the possibility of further tightening, leading to short-term volatility in global risk assets driven by both policy and geopolitical factors.