Oil is rising, inflation risks are looming again, and markets are now awaiting the release of US September CPI. Could this trigger the next bout of turmoil?
🛢️ Oil: Is There Still Room to Rise?
Tensions in the Middle East are increasing the risk of energy supply disruptions. If oil prices stay high, US headline inflation could exceed market expectations. However, oil prices don't always keep rising—easing tensions could trigger a sharp correction.
My view: oil is likely to strengthen while supply risks remain high, but chasing prices after a sharp surge is too risky.
🏦 U.S. Bonds: Watch for Rising Yields
If September CPI comes in higher than expected, hopes for Fed policy easing could weaken. U.S. Treasury yields may rise, putting pressure on bond prices.
I’m inclined to be cautious about U.S. bond prices ahead of the data release. However, if core inflation comes in below expectations, bonds could strengthen instead.
🎯 My Strategy Ahead of CPI
- Higher CPI: Watch for potential oil price increases and further pressure on bond prices.
- CPI in line with expectations: Wait for confirmation of the market’s direction before entering.
- Lower CPI: Watch for an oil price correction and potential bond price recovery.
Instruments to watch: BZUSDT, $TMF , $TBT , and RWUSD. Make sure you understand each instrument’s characteristics and risks before taking a position.
In conclusion, I’m inclined to be bullish on oil and bearish on U.S. bond prices if inflation surprises to the upside. However, I wouldn’t take a large position based solely on a forecast. Actual data, yield movements, and risk management remain the deciding factors.