The core PCE price index, released by the U.S. Department of Commerce, increased by 4.4% in December compared to the same period last year. This marked a noticeable decrease from the 4.7% recorded in November and represented the smallest annual growth rate since October 2021. Additionally, personal consumption expenditures declined by 0.2% in December, indicating a cooling of the economy beyond market expectations. The Federal Reserve’s interest rate hikes have started to significantly suppress the demand side, contributing to the sustained decline in inflation in 2023. Combined with better-than-expected GDP data for the fourth quarter of 2022, this has fueled optimism on Wall Street that the tightening cycle may come to an end in the short term and that the economy can achieve a soft landing. This underlying logic has driven a significant rebound in the stock market since the start of the new year. After digesting the economic data for January, Wall Street believes that the current interest rate levels have effectively curbed inflation, and it is necessary for the Federal Reserve to timely shift its stance on interest rate hikes to avoid an economic recession and ultimately achieve the policy objective of a soft landing. The reopening of the Chinese economy has also boosted investor confidence in avoiding a global economic downturn, as businesses of related listed companies in the Chinese market gradually resume production and sales in the post-pandemic era. Considering the global trend of declining inflation, the gradual shift in monetary policy, the complete end of the pandemic worldwide, and the normalization of the industrial supply chain, it is undeniable that investors in 2023 will still face some uncertainties. However, some long-term capital has already entered the market, driving the market to slowly transition into a positive cycle where good news is good news and bad news is also good news. Overall, the confirmation of declining inflation and the impending end of the tightening cycle suggest that the global economy is expected to avoid a recession and move towards the best outcome of a soft landing.