Inflation Data, Bitcoin, Volatility – What’s Next?

Inflation Data

CPI data released on Wednesday show where the journey continues. Experts believe that the CPI in the month of December should have risen above 7%. Moreover, the data on producer price inflation that will be published on Thursday is also expected to rise.

If the CPI and PPI continue to rise, the Fed will really be forced to raise interest rates somewhat as early as March. Negatively, therefore, came the increase in non-farm payrolls last week, which grew by far less than expected. If the Fed raises interest rates and the labor market data turns negative as a result, we will see what the Fed values in terms of its dual mandate.

In addition, retail sales and industrial production for December will be released on Friday.

Powell’s Testimony

Fed Chairman Jerome Powell is scheduled to testify Tuesday before the Senate Banking Committee at a confirmation hearing on his nomination to serve a new four-year term as Fed chairman.

Several Fed officials are expected to give statements this week as well. Their remarks will be closely watched, following the minutes of the last Fed meeting.

Volatility

The Federal Reserve is poised to raise interest rates faster than previously thought. It is struggling with inflation, which has soared since last year. At the moment, every statement of the Fed makes the markets fluctuate.

Investors have been pulling their capital out of high-growth, high-tech stocks and shifting it into value-oriented stocks. This is expected to work better in a high-yield environment.

Bitcoin

Bitcoin has been under pressure since the start of the new year, falling to its lowest level since late September amid the sell-off in the crypto market.

The largest cryptocurrency has fallen more than 40% since it hit a record high of $69,000 in November. The negative price movement came after news that the Federal Reserve will raise interest rates faster than expected.

The Fed’s more aggressive policy will make investors want to invest in lower-risk assets.

Bitcoin remains under pressure as the network’s global computing power plummeted last week. That came after Kazakhstan’s internet shutdown during the uprising which hit the crypto mining industry hard.

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