The Magazine for Asian Investors
Bitcoin fell below $29,000 today after the U.S. released the Consumer Price Index (CPI), which was higher than expected. This may prompt the Federal Reserve (Fed) to accelerate rate hikes at its meeting next week in an effort to curb inflation.
Early in the morning in Asia, the bitcoin price fell 3.55% to $28,918.50 before gradually rebounding slightly.
In addition, market trading was impacted after the University of Michigan announced that the U.S. Consumer Sentiment Index fell to a record low amid inflation concerns.
The Dow Jones Industrial Average fell 880 points, or 2.73 percent, to close at 31,392.79.
The S&P 500 fell 2.91% to 3,900.86 points.
The Nasdaq fell 3.52% to close at 11,340.02 points.
Analysts at Barclays Bank believe that the Fed has good reasons to surprise the markets next week with an unexpectedly high rate hike. The released inflation figures show a further increase.
The Fed already initiated its rate hike cycle in March with a 0.25% rate hike and in May with a 0.50% rate hike. Fed Chairman Jerome Powell has signaled that the Fed will raise rates by 0.50% in both June and July.
The Labor Department reported that the CPI rose 8.6 percent in May from a year earlier. This is the highest level in more than 40 years, or since 1981.
Meanwhile, the core consumer price index (excluding food and energy) rose by 6.0 percent year on year in May.
In addition, the Fed began reducing the size of its balance sheet in June. Consistent with the May 4 monetary policy, the Fed will reduce its balance sheet by $47.5 billion per month beginning June 1. Beginning Sept. 1, the Fed will double its balance sheet reduction limit to $95 billion per month.
Investors are concerned that the Fed’s rate hike and balance sheet cuts could plunge the U.S. economy into recession after it contracted 1.4% in the first quarter of 2022.
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Saturday, 11 June 2022