Cryptocurrencies took a hit on Tuesday, with both Bitcoin and ether trading around 4% lower over 24 hours. Meanwhile, US equities saw mixed returns as investors awaited inflation data and an update from the Federal Reserve. The S&P 500 and Nasdaq Composite indexes were mostly flat at the time of publication. The Federal Open Market Committee began their two-day policy setting meeting, with central bankers expected to release their interest rate decision and projections on Wednesday.
Analysts are warning investors not to expect a return in equities this week, as historical data suggests that the “Fed Drift” phenomenon may be waning. The US Bureau of Labor Statistics is also set to release the latest Consumer Price Index (CPI) report on Wednesday, with analysts predicting a minimal impact on markets. UBS analysts expect the yearly inflation figure to remain steady, providing reassurance to investors that prices are trending lower.
The impact of the CPI report on the market is expected to be short-lived, as the Federal Reserve will reveal their plans shortly after its release. However, the report remains an important medium-term indicator for investors, as the Fed cannot cut rates significantly until core CPI is closer to its 2% target. A lower-than-expected inflation read could send prices higher, while a higher inflation print could send prices lower in the short term.
For more insights on what to expect on Wednesday, readers can subscribe to Blockworks’ newsletter, On the Margin. As the week progresses, investors will be closely monitoring the Fed’s interest rate decision and projections, as well as any updates on inflation trends. It is crucial for investors to stay informed and react strategically to market fluctuations, especially during key events like FOMC meetings and CPI reports.
Overall, market volatility is expected to continue as investors navigate uncertainty surrounding inflation and interest rate decisions. It is important for investors to stay vigilant, stay informed, and seek professional advice to make informed decisions. By closely monitoring market trends and key indicators, investors can position themselves for success in a rapidly changing economic landscape. Subscribe to Blockworks’ newsletter for the latest updates and insights on market developments.
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