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Wall Street was mixed as traders reacted to U.S. inflation data.
All eyes turned to the personal CPi reports, which will strongly determine if there will be a summer interest rate cut or not. The battle against inflation will continue until the Fed succeeds in burning down consumer prices to below or at least 2%.
Marketers were expecting that in the last month, personal consumer prices would notch up by 0.4%, which would make them the highest in the past few years. Still, the reports delivered by the Bureau of Statistics show that January consumer prices were the smallest in the past three years.
The January consumer price index was up by 0.3%. Yearly, the CPI reports a 2.4% increase, which also counts as the largest increase in the past three years.
Despite the decline, product prices remain above the target point of 2%, which will likely mean stronger interest cuts. “We are bound to have bumps along the road to disinflation,” says Fed Vice Chair Philip Jefferson. The New York Fed president also shared his opinion about today’s reports and said, “While the economy has come a long way toward achieving better balance and reaching our 2% inflation goal, we are not there yet.” John’s words will suggest one thing, and that is that the Fed officials will have one more interest rate cut this year, most likely in June. This is supported by his second commitment: “I am committed to fully restoring price stability in the context of a strong economy and labor market.”
Wall Street edged higher after the release of the reports, but only two of the main three indexes managed to stay up. The Dow Jones average industry lost its momentum and fell by 0.07%. The S&P 500 index edged higher by 0.25%, and the Nasdaq composite added 0.5%. As for the bond market, the Treasury yields were down; this includes all bonds. The 10-year bonds were down by 0.6%. The fixed 30-year mortgage rates declined by 0.7%, and the 3-year bonds were down by 0.5%.
Meanwhile, BTC pieces are experiencing significant increases in the crypto market for the first time since their 2021 peak. BTC prices have hit a two-year high in the last two weeks, surpassing the $56.000 level. This surge marks the largest monthly gain since December 2020. Thanks to contributing factors, BTC managed to get back on track. These factors include the emergence of spot bitcoin ETFs, which attract mainstream investors.
The market cap of bitcoin has reached $1.23 trillion within the past 24 hours. On top of that, its market outlook looks bright based on initial forecasts and predictions. Analysts, such as Stony Chambers Asset Research, predict Bitcoin could reach $175,000 before 2026.
Institutional interest is growing, with reports suggesting Morgan Stanley (MS) is considering offering spot bitcoin ETFs on its platform.
As for the energy market, oil prices rose slightly as traders reacted to the inflation data. At the same time, attention remains on developments in the Middle East and potential extensions of OPEC+ output cuts. On top of that, concerns over slowing demands and rising inventories also present a challenge to the market, and all will affect the economic cycle recovery.
