Markets around the globe are focused on inflation and its potential ramifications for monetary policy, and we got good news on this front out of Europe yesterday.
The month started out with the release of the June FOMC meeting minutes, revealing that some officials had wanted to hike rates as opposed to the pause the Fed ultimately took.
The past two weeks have been particularly eventful for crypto markets, as three distinct and sharp sell-offs occurred. The first was during the early part of last week as the SEC filed lawsuits against Binance and Coinbase on Monday, June 5th, and Tuesday, June 6th, respectively.
The macro picture of the last two weeks is that of abating US inflation (UK and EU inflation is still hot) where headline inflation in April rose 4.9%, down from +5.0% the month prior.
Limited access to fiat rails, in conjunction with increased regulatory scrutiny and tax considerations, continue to pose a challenging environment for many crypto institutions.
Stocks have recovered and yields have bounced from the lows that accompanied the heavier Fed rate cut expectations, while bitcoin and gold have lost their recent highs of $31k and $2,000.
There is growing perception that the unrealized losses in bank held-to-maturity securities portfolios (which sparked runs on Silicon Valley Bank and others) will stop the Federal Reserve from raising rates in the future to fight inflation.
The past couple of weeks have seen a sharp reversal of post-FOMC exuberance. US CPI data for January came stronger than expected, as did the PPI, and then Wednesday the ISM print added to inflation worries.
The long-awaited FOMC meeting finally arrived last week, where the Fed hiked rates by a reduced 25 bps and provided commentary that was interpreted by markets as dovish.