Against the backdrop of attacks on energy infrastructure in the Middle East and disruptions to shipping routes, international oil prices have surged sharply, directly weighing on the opening of major European stock indices across the board. As of the time of writing, the STOXX 50 in Europe is down 0.6%, Germany’s DAX is down 0.3%, France’s CAC 40 is down 0.4%, Italy’s FTSE MIB is down 0.5%, Spain’s IBEX is down 0.3%, while only the UK’s FTSE 100 is up slightly by 0.3%.
The surge in oil prices is not an isolated event; it has seriously undermined the market’s earlier optimistic consensus that inflation would gradually cool. With an energy supply shock layered on top of the recent hot inflation data from the United States, market expectations for the Federal Reserve to raise rates at its policy meeting this week have jumped to around 87%. For policymakers, the return of input-driven inflationary pressure implies that “higher for longer” will inevitably evolve into a more tightening policy path.
On the macro-liquidity front, elevated energy costs are lifting inflation expectations, forcing global major sovereign bond yields to rise again, while the U.S. dollar index is also being strongly supported. The dual pressure on both the stock and bond markets is accelerating the contraction of global liquidity. Meanwhile, valuation bubbles that had been supported by expectations of easier policy are now facing the risk of being relentlessly squeezed.
For high-risk assets such as cryptocurrencies, the deterioration in the macro-liquidity environment will be a material negative factor. Ahead of the Federal Reserve’s decision, risk-averse sentiment has risen markedly; risk appetite has been suppressed. The broader crypto market and $BTC face severe challenges from liquidity withdrawal and intensified short-term volatility. Investors should remain highly alert to downside risks stemming from policy tightening beyond expectations.
#CrudeOil #Inflation #FedRateDecision
The surge in oil prices is not an isolated event; it has seriously undermined the market’s earlier optimistic consensus that inflation would gradually cool. With an energy supply shock layered on top of the recent hot inflation data from the United States, market expectations for the Federal Reserve to raise rates at its policy meeting this week have jumped to around 87%. For policymakers, the return of input-driven inflationary pressure implies that “higher for longer” will inevitably evolve into a more tightening policy path.
On the macro-liquidity front, elevated energy costs are lifting inflation expectations, forcing global major sovereign bond yields to rise again, while the U.S. dollar index is also being strongly supported. The dual pressure on both the stock and bond markets is accelerating the contraction of global liquidity. Meanwhile, valuation bubbles that had been supported by expectations of easier policy are now facing the risk of being relentlessly squeezed.
For high-risk assets such as cryptocurrencies, the deterioration in the macro-liquidity environment will be a material negative factor. Ahead of the Federal Reserve’s decision, risk-averse sentiment has risen markedly; risk appetite has been suppressed. The broader crypto market and $BTC face severe challenges from liquidity withdrawal and intensified short-term volatility. Investors should remain highly alert to downside risks stemming from policy tightening beyond expectations.
#CrudeOil #Inflation #FedRateDecision