Investors were glued to the US inflation data, driving caution in the markets. Fears of inflation exceeding expectations again fueled anxiety. Despite Fed Chairman Powell's somewhat reassuring tone, his comments hinted at a prolonged period of high interest rates, a bitter pill for investors.

Powell suggested that interest rates might remain at their peak for an extended period, while some members hinted at a potential increase in the neutral interest rate. This sparked concerns about additional rate hikes, dampening hopes for cuts. The initially expected March rate cut has been pushed to September, with market estimates now reduced to 50bp from 150bp.

In this environment, the April inflation data was crucial in assessing the effectiveness of the Fed's tight monetary policy. The headline inflation rate met expectations at 3.4%, slightly below the previous month's 3.5%. Core inflation also aligned with expectations at 3.6%, down from 3.8% the previous month. The data had a positive impact on cryptocurrency markets, boosting the price of Bitcoin.

The inflation data has momentarily eased concerns, but investors remain cautious, awaiting further signs of monetary policy's impact. As the market navigates this uncertainty, the focus remains fixed on inflation data and its implications for interest rates and the broader economy.