US markets break winning streak after post CPI exuberance, cryptos down again

The US equity post CPI rally of last week ran out of steam in Mondays session as consumer inflation expectations rose and mixed messages from Federal Reserve members saw a choppy first half of the session only to see a steep decline into the close with the Dow Jones ultimately finishing down 211 points (-0.63%)

Futures opened Monday with a gap down after hawkish comments on Sunday from Fed Governor Waller who warned the market was getting ahead of itself in calling the top in inflation and a Fed pivot. Markets then recovered as Fed Vice-chair Brainard said in a Bloomberg interview that it is probably appropriate to “soon” move to a slower pace of rate hikes, though this optimism didn’t last with equities selling off in the second half of the session. With a dearth of major figures to be released before the next Fed meeting in 4 weeks any comments from Fed members have taken on extra importance as to clues of what’s coming from the Fed next.

In FX the USD Index had a choppy, low volatility session  to ultimately slightly stronger, The greenback attempted to pare some of its losses after last weeks CPI, but was ultimately unsuccessful as it could not maintain its European morning strength through the NY session. AUD was the relative G10 outperformer, seeing marginal gains against the Dollar, with  AUDUSD trading in a tight range between 0.67239-66637.

Oil prices were lower Monday with surging Beijing COVID cases and a mixed Dollar hitting the demand outlook, selling through the whole session to settle at the lows of the session with US Crude settling below $85 per barrel.

Cryptos, which everyone is watching after last week’s steep FTX inspired sell-off had another volatile session, with Bitcoin which was hammered to session lows just minutes before stocks were also hit, with confidence in the Cryptoverse shaken by the implosion of FTX, the volatility looks set to continue for now.

Today’s upcoming economic releases: