Last week’s agenda was the Fed’s highest rate hike in 30 years. The falconry Fed created fluctuations in the markets. Spot gold closed Friday with a loss of 0.97%, while the cryptocurrency market took heavy losses. Leading crypto Bitcoin plunged deep after strong waves.
US recession risks rise
Stronger-than-expected CPI data set the stage for last week. The inflation rate, which marks historical highs, has turmoiled the markets and increased the risks of recession. Now analysts expect the US economy to contract slightly by mid-2023. In addition, economic data released this week proves that the probability of a soft landing is decreasing.
The Federal Reserve’s response to the strong CPI data was also historic. cryptocoin.com As you can see, the Fed increased the Federal Funds Rate by 75 basis points. Also, Fed Chairman Jerome Powell signaled a similar increase in July. Markets are now pricing in 75 basis points as of July.
How has Bitcoin and gold reacted to the developments?
The strongest reaction to these developments came from the cryptocurrency market. Leading crypto Bitcoin broke the psychological support level of $ 20 thousand. Over the weekend, the bears took control and pushed Bitcoin (BTC) below $18,000. However, Bitcoin recovered a bit by press time and managed to rise above $ 19,000.
Gold, which made a short rally during the week, lost nearly 1% on Friday. However, the yellow metal surprises everyone by staying above $1,800, according to analysts. Some analysts think that even the Fed’s more aggressive stance will not affect the precious metal excessively.
BoE also decided to raise interest rates
The Bank of England increased its Rates by 25 basis points as Growth Unexpectedly Contracted. The outlook for the UK economy saw an unexpected contraction in April, with GDP falling 0.3% month-on-month. For this, the economy is likely to start clouding over. Against the backdrop of slowing growth and high inflation, the BoE increased the interest rate by 25 basis points at its monetary policy meeting in June, bringing the policy rate to 1.25%.
Treasuries fall as yields respond to CPI and Fed
New economic data and aggressive Federal Reserve measures have boosted Treasury yields sharply this week. Monday, in particular, was one of the most volatile days of the year for the bond markets. That’s because interest rates rose by about 30 basis points on most parts of the Treasury curve.
Topic of the week: What is the latest situation in supply chains?
There is still a lot of workload that needs to be eliminated. But overall, things tend to improve gradually on the supply side. That doesn’t mean we’re out of business yet. Because in many industries, there is still talk of supply chain disruptions, especially regarding the lockdowns in China.
Data for Bitcoin and gold investors to follow
Canadian CPI (Wednesday), UK CPI and PMI (Wed/Thursday), Euro Area PMI (Thu) data will be released next week. In addition, US Existing Home Sales data will be released on Tuesday and New Home Sales data on Friday.
