Mixed Signals: US Inflation, BoE's Challenge, and Bitcoin's Vulnerability

It’s been a quiet start to the week with stocks edging lower in light trade due to the US bank holiday.

It feels like last week may have left us with more questions than answers in that the US inflation data was ok, not great, the Fed paused while forecasting multiple more hikes, and the ECB hiked while insisting more is to come.

 

Now it’s up to the BoE to continue its firefighting mission; one that is at risk of getting out of control despite the MPC’s efforts to contain it. Of all the major economies desperately trying to get a grip on inflation while delivering a soft landing, the UK looks least likely to achieve it.

The BoE will be crossing its fingers for some good news from the May inflation data the day before its decision but if recent releases are anything to go by, we probably should get our hopes up. And if we get another nasty surprise, I wouldn’t be surprised to see markets price in 50 basis points on Thursday above the 25 we see now.

 

More pain to come for bitcoin?

Bitcoin ended last week quite positively after dropping to three-month lows on Wednesday but it continues to look vulnerable to further declines. The two-month trend is not in its favour and the news flow isn’t exactly helping the situation either. It’s had a remarkable year and remains more than 50% higher so it’s hardly a dire situation.

And against that backdrop, recent losses are merely a corrective move in a more promising bull run. But there isn’t much to suggest it’s going to improve just yet, especially with the SEC going in hard on major exchanges.