๐บ๐ธ US CPI will be released tomorrow at 8:30am ET.
The market expectations are at 3.1%, while last month's CPI was at 2.9%.
Here are different scenarios:
1โฃ CPI > 3.1%
This will be bearish for markets.
This is because it'll mark the highest CPI print since June 2024.
2โฃ CPI = 3.1%
This will be in line with the expectations but still somewhat bearish.
This is because it'll show a 0.2% MoM CPI increase, which is 2.4% annualized CPI.
And the Fed target inflation is 2%, which means Powell could become a bit hawkish.
3โฃ CPI < 3.1%
A perfect scenario for risk-on assets.
Rate cuts will happen, and also the MoM increase in CPI will be just 0.1% or 1.2% annualized.
This will also boost chances of more rate cuts and will cause liquidity to flow into risk-on assets.
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In the middle of 2021:
$BTC drew down 56%
$ETH drew down 61%
$SOL drew down 67%
Many others 70-80%+
You can come up with all the reasons for why this cycle is different, but the mid-bull reset we're going through isn't unprecedented. Those calling for a full blown bear are misguided.