Some observers remain skeptical of the durability of this inflation-led recovery, arguing that the collapse in oil prices mainly drove the slower cost-of-living growth in June and that the recent recovery in oil makes this data outdated.
“The 3.5 per cent [CPI] number was driven by a 10% drop in gasoline through June, and that move had already reversed before the report was released, with Brent at a one-month high as the Hormuz situation escalates,” Ryan Lee, chief analyst at crypto exchange Bitget, said in an email.
“The markets are rallying on a June photograph, while July is developing differently, and the July print will be the first to carry the war premium,” Lee added.
Jasper De Maere, OTC trader at bill of lading market maker Wintermute, also urged caution while acknowledging inflation-driven rejection and profit-taking near $65,000.
“While the inflation data is indeed constructive and while positive headlines are very refreshing, it is worth noting that the background has not cleared as US attacks on Iran are in their fourth straight day and the Fear & Greed index only moved from 22 to 25, still Extreme Fear. One soft CPI push against an active military regime is the same risk shift as an active military regime,” he says. he said in an email.
