US equities and bonds drop ahead of key US CPI figure and Rate-hike odds rise

US equitiy markets were jittery on Tuesday  as traders await todays closely watched inflation figures out of the US. All major Indices declined with the rate and risk sensitive Nasdaq taking the biggest hit dropping 1.2%, selloffs in heavyweight Tesla (TSLA) and Nvidia (NVDIA) created further pressure for the tech index.

Todays core and headline CPI print will be crucial in gauging near term Fed actions with recent whipsawing in rate expectations driving equity and FX markets. With an around a 60% chance priced in by bond markets of a 75bp hike in September from the Fed, the CPI figures take on extra importance as rate markets will be looking for signs of inflation peaking– and a less aggressive Fed, or Inflation still on an upward trajectory resulting in a more aggressive Fed.

FX markets had a very quiet session, with FX traders seemingly waiting on the sideline until the US CPI figure is released, with the US dollar index ending unchanged after some early weakness (testing down to pre-payrolls levels) was reversed.

Bitcoin slipped lower on interest rate worries, testing support below $23k

Gold pushed back up to test the 1800 level, before retracing on late session USD strength.

US crude oil tested the $92 resistance level before dipping to finish the session marginally lower. Weighing on the crude price was indications that Russian crude shipments via a major pipeline to Europe may resume in a few days, Also the potential return of Iranian oil to the market.

Tonight’s US CPI figure will be released at 10:30pm AEST (12:30pm GMT)