Bitcoin slips as traders lift July Fed rate hike bets ahead of Inflation report
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- Bitcoin fell alongside major cryptocurrencies by 2% or more in 24 hours as traders sharply repriced July Fed rate hike odds from roughly 10% to about 50%, per Bloomberg money-market data.
- Fed Governor Christopher Waller said officials may need to raise rates to bring price pressures under control, catalyzing the hawkish shift in market expectations.
- The two-year U.S. Treasury yield climbed to 4.29%, its highest level since early last year, reflecting renewed expectations of near-term Fed tightening.
- WTI crude surged to nearly $80 a barrel from $67 at the start of the month after Trump reinstated a U.S. blockade of Iranian vessels in the Strait of Hormuz and demanded a 20% reimbursement fee on other cargo transiting the waterway.
- The June consumer-price index, due Tuesday at 8:30 a.m. ET, is forecast by Bloomberg-surveyed economists to show headline CPI falling below 4% annually, with May readings of 4.2% headline and 2.9% core.
- Fed Chair Kevin Warsh's congressional testimony will follow the CPI report; ING analysts noted he 'has enough ammunition here to ride the rate hike risk and instead hold pat,' given what they see as tame inflation expectations.
- ING added that any rate hike delivered is 'likely to be subsequently reversed,' with the 5-year curve pricing in bigger cuts than hikes ahead.
Why it matters: The Fed's rate path now hinges on a single inflation print — if June CPI stays sticky above the sub-4% forecast, the newly priced-in July hike becomes far more likely, tightening financial conditions and pressuring risk assets already down 2%. Crypto traders face a binary setup into Tuesday's 8:30 a.m. CPI release and Warsh's testimony, with Brent already stoking the inflation fears Waller cited.
