US Inflation Report Looms: Soft Print or Rate Hike Fears?

The latest US inflation data is set to be released on Wednesday, which could have significant implications for financial markets and the cryptocurrency sector. The July Consumer Price Index (CPI) report will provide insights into the state of inflation in the US economy, with expectations ranging from a soft print to a hot one.

Currently, there's a 52.1% chance that the Federal Reserve will hold interest rates steady in September, according to CME FedWatch data. This is almost evenly split with the 47.9% probability of a rate hike. Wall Street analysts are expecting headline inflation to rise by 0.12% to 3.4%, while core CPI excluding food and energy is expected at 0.22%.

HSBC expects another soft print, which could lead to declining Treasury yields and reduced rate hike bets, potentially benefiting risk assets. However, a hotter-than-expected inflation reading could strengthen the case for another Fed rate hike, putting pressure on stocks, bonds, and cryptocurrencies.