Released Friday, the US CPI data unexpectedly advanced to 8.6% in May.
The data slashed hope that inflation had peaked, and revived the hawkish expectations that the Federal Reserve (Fed) should get more aggressive if it wants to take control of inflation.
The unexpected U-turn in US inflation number also removed the 3% speed bump on the US 10-year yield. The 10-year yield shot up to 3.20%, the S&P500 took an ugly dive after the US CPI data revived hawkish Fed expectations. The index lost near 2.90% on Friday, Nasdaq slumped more than 3.5%. Bitcoin tumbled to $25K and American crude slipped below the $120 per barrel, on fear that the Fed may not have a choice but to push the US economy into recession to tame inflation.
In the FX, the US dollar is roaring again, and will likely soften before Wednesday’s FOMC meeting. Investors will also watch the US PPI due Tuesday, the Bank of England (BoE) and the Swiss National Bank’s (SNB) latest policy verdicts, the Connexa Sports Technologies IPO and the 618 shopping festival in China!
Source: Ipek Ozkardeskaya – Swissquote Bank Ltd