According to the latest forecasts from Wall Street strategists, an excessively hot US CPI data report could trigger a significant market shift. Specifically, if CPI significantly exceeds expectations, the market may move from "the Fed pausing rate cuts this year" to "the Fed possibly having to reconsider rate hikes." This would break the dovish optimism and bullish assumptions supporting the market's Risk-On sentiment, potentially pushing global stock, bond, and currency markets into a more intense repricing phase. For the global stock market rally, particularly driven by AI computing power trading amid rising risk appetite, this could mean at least a short-term major downward correction trend. Although US and global stock markets have recently hit record highs driven by strong US non-farm payrolls and an unprecedented AI computing power investment boom, extreme momentum trading, oil price shocks, inflation concerns, and rising long-term US Treasury yields have begun to emerge as key variables suppressing valuations. Notably, the 10-year US Treasury yield is forming a technical pattern suggesting further upside potential. If yields continue to break higher, they could threaten the stock market rally. Additionally, the latest geopolitical developments—specifically, Trump's rejection of Iran's peace proposal—prolong the de facto US-Iran dual blockade of the Strait of Hormuz, crucial to the global energy system. This could lead to further increases in international oil prices. Coupled with momentum trading indicators reaching extreme levels that have historically foreshadowed sharp short-term sell-offs, these factors may collectively drive the global stock market, which has surged recently amid the AI investment frenzy, toward a correction trajectory. US inflation is heating up again, primarily due to international oil prices rising over 60% since late February. Central banks worldwide, including the Fed, are nearing a point where action may be necessary. For now, the interest rate futures market expects the Fed to hold steady, with no rate cut signals likely until at least the end of this year. Meanwhile, the European Central Bank, Bank of Japan, and Bank of England may need to resume tightening policies soon. This is not just about central bank policies. The stakes are also high for the global stock market driven by the AI computing power frenzy, the US Treasury yield (often called the "anchor of global asset pricing"), and the US dollar index. This week's US April CPI data report will undoubtedly play a critical role in determining their next moves. CPI Storm Approaching! High Oil Prices May Ignite Inflation Beast April CPI is expected to be hot again, with economists forecasting a significant month-over-month increase of 0.6%, following a 0.9% rise in March. This is projected to drive the year-over-year CPI from 3.3% last month to 3.7%. Meanwhile, core CPI is also expected to see a notable jump, with the month-over-month increase possibly rising from 0.2% to 0.4%, and the year-over-year core CPI potentially climbing from 2.6% to 2.7%. Prediction markets like Kalshi align with analyst expectations, anticipating a 3.7% year-over-year and 0.6% month-over-month rise for CPI, and a 2.7% year-over-year and 0.4% month-over-month increase for core CPI. The concern is that May inflation is expected to rise further on top of April's strong reading; currently, CPI swap markets are pricing in overall CPI reaching 4%. Notably, US inflation data for March already showed signs of heating up, with month-over-month CPI surging 0.9%, the largest single-month increase since June 2022. Year-over-year CPI rose to 3.3%, the highest level in 2024. Gasoline price increases hit a record high since 1967. This warming CPI data will undoubtedly pose significant challenges for the Fed and global central banks, potentially pressuring them toward tighter monetary actions around rate hikes following inflation misjudgments in 2021 and 2022. The market has already reacted, with federal funds futures markets pricing in no Fed rate cuts in 2026 and none in the foreseeable future. These challenges extend beyond the Fed to other major central banks like the European Central Bank and Bank of England, as high inflation threats have forced rate futures and bond trading markets to quickly adapt to oil supply shocks. Since the start of the Iran conflict in late February, the Strait of Hormuz has been effectively blocked, cutting off one of the most critical shipping channels for supplying crude oil, natural gas, and refined fuel oil to global customers. This has significantly pushed up energy prices and heightened inflation concerns among global investors. The International Energy Agency stated that supply disruptions in the Strait of Hormuz due to this geopolitical conflict are causing the largest supply-side shock in human history. Citigroup, a Wall Street financial giant, noted in a research report that if long-term peace talks between the US and Iran remain difficult, leading to prolonged blockade and control of the Strait of Hormuz, the international oil price benchmark—Brent crude—could rise further from around $100 after recent pullbacks, potentially even reaching new阶段性 highs. The market has begun pricing in the possibility of European rate hikes, with the European Central Bank and Bank of England potentially hiking up to three times this year. Meanwhile, so far, the market has not priced in Fed rate hikes, only the end of the easing cycle. Even with accelerating CPI, the bond market has digested this relatively calmly, pricing risks with higher inflation expectations rather than higher real yields—implying the market still expects the Fed to have a dovish rate-cutting tendency, as some economists insist the Fed will treat oil price shocks as "transitory." Since international oil prices surged over 60% in late February, the 10-year US TIPS real yield curve has actually declined over the past few months, while the 5-year inflation swap has risen significantly. This makes the April CPI report particularly important, as a lower-than-expected report could prompt the market to reconsider the Fed's rate-cutting trajectory, while a reading significantly above market consensus could lead the market to price in rate hikes, challenging the market's optimistic bullish view that the Fed remains dovish. Furthermore, CPI could continue to significantly impact US dollar exchange rate trends and US Treasury yields. The 10-year US Treasury yield is nearing a key potential breakout point from a multi-year downtrend line, a level that has been repeatedly tested. If the 10-year yield curve sustainably breaks above the technical trend line and surpasses 4.4%, it could trigger a significant multi-month rise in the 10-year yield, potentially pushing it back toward the historically high levels seen in October 2023. The same applies to the US dollar index, the benchmark for dollar strength. The dollar index has struggled to break above the crucial 101 resistance level but has formed an upward trend in recent weeks; if it breaks above 101, the dollar could move toward its highest level since January 2025, near 109. Currently, the bond market is still pricing oil price shocks with "rising inflation expectations, falling real yields," essentially believing the Fed will treat oil price shocks as temporary. But if CPI consistently exceeds expectations, this dovish assumption will be challenged. If the 10-year US Treasury yield effectively breaks above 4.4%, it could trigger a multi-month upward move; if the dollar index breaks above 101, it could move significantly toward the 109 area near January 2025. Currently, both interest rates and the dollar are at crucial positions on technical charts. If both the dollar and 10-year US Treasury yields sustainably break higher after the CPI report, this could become a major red sell-off alarm for the market, difficult for Fed policymakers and investors to ignore. If both the 10-year US Treasury yield and the dollar continue to range-trade, the market will remain neutral for a longer period, or at least stay观望 until the next CPI report in June. During this time, if AI-related positive catalysts密集 emerge, they could drive US and global stock markets to further record-breaking牛市狂欢. CPI as the "Master Switch" for Three Markets! An Overheated CPI Could Pull the Market from Risk-On Back to the "High Yield, High Dollar, High Volatility" Era An excessively hot US CPI inflation report could force the market to reassess the Fed's reaction function. If CPI is significantly higher than expected, the market may shift from "no rate cuts for now" to "repricing rate hike risks," driving the 10-year US Treasury yield and the dollar to break above key technical levels, thereby pushing global risk asset prices like stocks from Risk-On to短暂且剧烈的抛售行情. For the bond market, a hot CPI most directly implies: rising long-term nominal yields, higher inflation compensation, and the potential for the 10-year US Treasury yield curve to continue breaking higher. If the market believes the Fed "sees through" oil price shocks, real yields may not rise significantly; but if CPI heat spreads to core inflation, wages, and service prices, the bond market will have to shift from "one-time oil price shock" to "more persistent inflation shock," at which point real yields will also rise, and the 10-year US Treasury may retest higher ranges. Recently, Wall Street giant Barclays delayed its expectation for Fed rate cuts in 2026 to 2027; traders in the interest rate futures market recently priced about a 78.7% probability of unchanged rates through the end of 2026, indicating the bond market has significantly weakened the "rate cut dream." If US Treasury yields with maturities of 10 years and above continue to rise, for core risk assets like stocks, cryptocurrencies, and high-yield corporate bonds, this equates to "significantly higher funding costs + weaker liquidity expectations + expanding macro denominator" occurring simultaneously. Theoretically, the 10-year US Treasury yield is equivalent to the risk-free rate indicator r in the denominator of the DCF valuation model, an important valuation model in the stock market. If other indicators (particularly cash flow expectations in the numerator) do not change significantly—for example, during earnings season when the numerator lacks positive catalysts and is in a vacuum—if the denominator level is higher or operates persistently at historical highs, valuations of high-valuation tech stocks closely tied to AI, high-yield corporate bonds, and cryptocurrencies等风险资产 at historical highs face potential collapse. For the foreign exchange market, an excessively hot CPI is undoubtedly very bullish for the dollar, especially against the backdrop of重新上行 US yields and more fragile growth in other economies. The core logic behind this is: if US inflation reheats but the economy remains resilient, the Fed maintaining high rates or even signaling more hawkishness would expand the dollar's relative interest rate advantage;同时, geopolitical conflicts and oil price shocks would also strengthen safe-haven demand for the dollar. If the dollar index breaks above 101, it could open technical space to rebound toward 109—consistent with the recent trading pattern where energy-importing economies like Japan and South Korea are pressured by oil price shocks, and monetary authorities face greater exchange rate pressure. For the stock market, a hot CPI is not simply "bad for everything" but会改变市场内部结构. If CPI is偏热, overall US stock valuations will be pressured by higher discount rates, especially high-duration, unprofitable growth stocks, AI-driven热门动量股, and the most crowded parts of semiconductor valuations; but energy, oil services, inflation hedges, and value stocks with strong cash flows and pricing power相对占优. If CPI is only energy-driven and core inflation appears温和且不及预期, the market may continue betting on "profit revisions driven by the AI computing infrastructure frenzy + economic resilience" to offset pressure, implying the AI-driven global stock market牛市基调与主趋势暂时完好无损; but if core inflation also明显升温, the stock market will shift from "profit-driven牛市" to a more complex pricing environment of "high yield curve压估值 + inflation eroding profit margins."