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August CPI data released, good news: the probability of a rate hike in September has not exceeded 70%. Bad news: nominal CPI monthly rate is 0.4%, core CPI monthly rate is 0.3%, representing the worst hawkish combination. After the data release, the CME September rate hike probability surged to 86.7%, which basically aligns with my previous personal expectations. A surge in probability above 80% means market traders and institutions have officially started pricing in the rate hike from prior defensive position reductions. Most notably in the bond market, the 2-year yield rose while the 20-30 year yields declined. This is not divergence but a typical rate hike pricing pattern, because once the market confirms a rate hike, and even potential further hikes, it suppresses long-term yields. On the other hand, as rate hikes begin to be priced in, short-term weakening of long-term yields plus a drop in oil prices actually gives the risk market a short-term breather. However, one should not be overly optimistic at this point. Once the market gradually completes pricing in the rate hike, long-term yields and 2-year yields will continue to rise, and the risk market will face pressure. Moreover, oil prices have not returned to a safe range. The pre-market rebound in US stocks, or a slight rebound after the open, for high Beta stocks, I believe is a good opportunity for a rebound and position reduction before next week's rate hike #PPI高于预期，今晚CPI定方向