Bitunix Analyst: CPI to Be Key Factor in Fed Rate Decision for September

Huo Xing Finance reports: On September 3, Bank of America’s latest analysis indicates that while the August non-farm payrolls report released on Friday may influence interest rate expectations, it is unlikely to independently determine the Fed’s September policy decision unless employment data shows a significant deterioration. The true key lies in the CPI data to be released on September 11. This means the market’s rapid repricing of rate hike probabilities is no longer solely focused on whether the labor market is cooling, but rather on whether inflation can convince the Fed that high interest rates must remain in place. This shift in policy expectations is directly reflected in bond markets: U.S. long-term yields remain elevated, while yields on government bonds in major economies such as Japan, Germany, and the UK have also risen in tandem, signaling that pressure from high interest rates is extending beyond individual central bank policies to become a result of global fiscal deficits, debt supply, and rising funding costs. For equities and cryptocurrencies, persistently high long-term yields imply that discount rates and funding costs continue to rise; even as markets maintain optimism around AI and economic growth, they must confront the reality of compressed valuation space. Gold, meanwhile, is also under short-term pressure from a stronger dollar and rising real yields, but if higher yields primarily reflect fiscal and sovereign credit risks, gold’s safe-haven appeal may regain support. In Japan, the Bank of Japan’s policy decision on September 18 and the risk of intervention near USD/JPY 160 add further uncertainty to global capital allocation. If the BOJ raises rates further, narrowing U.S.-Japan yield spreads could incentivize Japanese capital to flow back home; additionally, recent reassessments of asset allocation by GPIF, combined with Japanese domestic bond yields reaching multi-year highs, may prompt a reevaluation of allocations to overseas bonds and equities. This is not merely a yen issue—it could generate spillover effects across global bond markets. Therefore, what matters in September is not any single data point, but whether U.S. inflation, Japanese monetary policy, and global bond supply and demand are collectively driving up funding costs. If CPI remains sticky, Fed rate hike expectations may stay elevated, with stronger U.S. Treasuries yields and the dollar continuing to constrain high-valuation assets; conversely, if inflation cools significantly, a decline in long-term yields could ease valuation pressures on equities and crypto markets. For markets, the central question is shifting from “When will the Fed cut rates?” to whether global capital has entered a new phase of higher funding costs and is actively seeking higher risk-free yields.