- Stocks whipsawed after an unexpectedly hot US inflation report shook global financial markets, raising chances that the Federal Reserve will tighten its belt even further.
- The S&P 500 failed to close in the green after a strong recovery from a 1.6% decline in a session of tense swings. Hawkish signals from Fed's Bostic, who stated "everything is in play" to counteract price pressures, also weighed on confidence.- Two-Yr Treasury yields, which are more susceptible to imminent Fed movements, rose. The euro recovered after briefly dipping below $1, while the loonie fell as the Bank of Canada boosted interest rates by a full percentage point.
- Bitcoin rose amid a revival of its inflation-hedge appeal.
- The swap markets now indicate that the anticipated outcome of the July Fed policy meeting is a coin toss between a 75-basis-point increase and a 100-basis-point increase. The rationale for this is that the largest increase in the Consumer Price Index since 1981 suggested that an inflation peak may still be out of reach.
- Bank of America economists predict a "mild recession" in the United States this year, citing decreasing service expenditure and high inflation, which is causing consumers to cut back. They join Wells Fargo and Nomura in anticipating a decline in 2022. According to Deutsche Bank, one will begin in mid-2023.
