Editor's note: Dr. Dai Xianfeng is a macro hedge fund manager working in the United States.

He has rich theoretical and market experience and has served as a fund manager in a domestic mainstream fund company.

Now, Dr. Dai Xianfeng writes a weekly market report every week.

With his permission, "Understanding the Economy" will publish his views on the global market every week, asking him to bring front-line market thinking that is closest to Wall Street.

A. General central bank tightening is accelerating rather than slowing down.

In the past week, the Bank of Canada and the European Central Bank both raised interest rates by 75 basis points, and the ECB's deposit rate is currently positive at 75 basis points.

The Bank of England and the Federal Reserve are likely to follow suit and raise interest rates by 75 basis points.

The Fed's previous approach of raising interest rates by 25 basis points at each meeting now looks outdated.

75 bps or even 100 bps has become the new normal.

But at the same time, inflation may indeed have peaked.

The increasing hawkishness of central banks around the world, at least in advanced economies, and the possibility of peaking inflation indicate that central bank tightening may finally slow down from 2023.

And by slowdown, I don't mean this slowdown from 75 basis points to 50 basis points, which is likely to happen over the remaining months of the year.

What I mean by slowing down is lowering the rate hike to 25 basis points and then ultimately pausing the rate hike.

We may have to wait until 2023 to see this happen.

Inflation has clearly peaked, and the central bank's suspension of tightening policy will be the time when risk assets bottom out, because inflation and central bank interest rate hikes are the original reasons for the market decline.

In this case, the market may be better in 2023.

B. Competitive Tightening The Bank of England entered the interest rate hike cycle relatively early, earlier than most other developed country central banks.

The Bank of England has been tightening aggressively so far this year.

Emerging markets entered the interest rate hike cycle earlier.

Many emerging market countries will begin to raise interest rates in mid-2021.

The only exception is China.

China has been cutting interest rates since 2023.

Compared with other countries, China is clearly in a different cycle.

C. Inflation may be peaking.

Central banks around the world are anxious right now because inflation is high and rising everywhere, especially in developed markets and especially in Europe.

Inflation is a big problem in Europe, including the UK, due to the war between Russia and Ukraine.

But the UK and EU countries are taking steps to cap the price of energy for consumers.

This may reduce their inflation rate.

Inflation in emerging markets appears to be peaking.

The recent fall in oil prices has eased inflationary pressures.

If one were to simply look at the curve naively, the recent fall in oil prices would have brought about a significant fall in UK inflation.

However, the reality is that besides oil, there are many supply problems that lead to inflation.

Related Q&A: What is inflation? “Currency” refers to currency.

"Inflation" means that there is too much money, the money supply exceeds the objective needs of economic operation, and the government issues more banknotes, causing the currency to depreciate. This phenomenon is called inflation.

Thus the monetary phenomenon of skyrocketing prices.

"Inflation" has the following characteristics: (1) Inflation is linked to the circulation of banknotes and is a unique phenomenon under the conditions of banknote circulation.

(2) Inflation is linked to prices (3) Inflation is linked to the overall price level (4) Inflation is linked to the continued rise in prices (5) There are two types of inflation: overt and covert inflation.

The main measurement indicators include: (1) Consumer price index.

It is an indicator used to measure the average change in prices of goods and services consumed by urban households and individuals in various periods.

(2) Wholesale price index.

It is an economic indicator that reflects the average change in prices of various commodities in the wholesale market in different periods.

(3) Gross national product deflator.

It is an economic indicator that measures the changes in the overall price level of final products and services produced and provided by a country's economy in different periods.

(4) Determination of hidden inflation. The classification of inflation includes (1) According to the causes of inflation, it can be divided into several types: demand-pull type, cost-push type, structural imbalance type and expected inflation. (2)

According to the manifestations of inflation, it can be divided into: open inflation and hidden inflation (3) According to the different extent of the increase in the overall price level, inflation is generally divided into crawling inflation, mild inflation, and galloping inflation.

Inflation and hyperinflation.