Institutional: U.S. Inflation Data Falls to Three-Year Low, but Crypto Markets React Tepidly

Despite US inflation falling to its lowest level in three years, financial markets have yet to react even as investors look to the Federal Reserve for a possible interest rate cut. Crypto markets, in particular, have been largely unaffected by the news, with the likes of Bitcoin quickly resuming gains after a brief decline. Cryptocurrency markets have reacted lukewarmly to the inflation report, in part due to growing investor interest in the bond market and the brewing storm over the U.S. presidential election. Harris' strong performance in recent debates has rekindled Democratic hopes of winning the White House election, which is seen as a possible harbinger of dovish monetary policy. Conversely, if Trump wins re-election, it could increase government spending and with it put upward pressure on interest rates. U.S. Treasury yields have borne the brunt of the change in investor thinking, and this sudden shift in market sentiment suggests a dramatic change in investor attitudes, heightening pessimism about the economy and general expectations of lower borrowing costs. Market watchers say caution is still the dominant market sentiment. Investors are restraining themselves, choosing to wait for clearer signals before readjusting their portfolios.