Bets that US rates will peak at 6% weigh on sentiment [Video]

US stocks failed to keep up with the European optimism on the back of rising bets that the Federal Reserve (Fed) could hike the interest rates to 6%.

In fact, option traders are piling into bets that the US rates could peak at 6%.

Plus, the surprise 50bp hike from Mexico’s Banxico, on the back of unexpected – and unwelcomed inflation jump since the end of last year, also raised worries that the US could experience a similar uptick in inflation, and, may have to raise rates higher.

And the strong US jobs market, the latest recovery in energy and commodity prices on the Chinese reopening optimism, and the sudden jump in second-hand car prices are red flags…

The S&P500 fell 0.88% yesterday, and Nasdaq retreated 0.90%. Topsellers will likely remain in charge of the market on the possibility that maybe inflation in the US may have not eased to 6.2% as expected by analysts.

But nothing is clear before next Tuesday’s CPI release, in terms of Fed expectations.

What’s interesting though, is that the hawkish Fed bets don’t translate fully into the US dollar valuation. The US dollar remains under pressure despite the positive pressure on the US yields. And the 50-DMA offers remain particularly solid in the US dollar index.

Finally, Bitcoin fell 5% on news that Kraken stops staking. Negative pressure in tech stocks could further weigh on appetite.