Tech stock futures slip as investors brace for a jump in inflation, while bitcoin rebounds after sharp drop
- Tech stock futures slipped on Thursday as investors braced for key US inflation data.
- US CPI data is expected to show that prices jumped 4.7% in May from 4.2% in April.
Bitcoinrebounded after its recent sharp drop, after El Salvador accepted it as legal tender.
Tech stock futures slipped on Wall Street on Thursday as investors around the world awaited key US inflation data, which is expected to show a sharp rise in prices in May.Meanwhile, bitcoin rallied after its recent tumble as investors were drawn in by the lower price. The dollar and Treasury yields moved slightly higher.
Yet the US consumer price index inflation data, due to be released at 8.30 a.m. ET on Thursday, has the potential to shake markets.Economists expect CPI to have jumped 4.7% year on year in May from 4.2% in April, which was the highest reading since 2008. Some investors worry that rising prices could force the Federal Reserve to reduce its support for the economy. Inflation also erodes the real returns on financial assets.
Markets should be able to digest a consensus rise in inflation, but will start to worry if the Fed begins to shift its position, Alan Ruskin, chief international strategist at Deutsche Bank, said.
"Next week, the [Fed] is going to have a tougher time maintaining exactly the same ultra-dovish posture as the last few meetings, given the inflation overshoot from prior expectations," he said.However, Paul Donovan, chief economist at UBS Wealth Management, said he agreed with the Fed's view that inflation should be transitory.
"The effect of very low prices this time last year and the uncoordinated reopening of the global economy are contributing to reported price increases in specific product markets, but should not last," he said.
Elsewhere, bitcoin rallied on Thursday as investors moved in to buy the recent dip, after El Salvador's move to make the crypto asset legal tender restored some positivity to the market.The cryptocurrency was up 1.4% to $36,900, having fallen to around $31,000 on Tuesday. It remained roughly 43% below April's record high, but around 25% higher for the year.
The bond market has, in recent weeks, appeared unfazed by rising inflation. The 10-year yield dropped below 1.5% for the first time in a month on Wednesday. The dollar index climbed 0.15% to 90.26 ahead of the inflation data.
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