Selloff in Global Bonds: Hot US CPI and Fed Rhetoric Amplify Rate Hike Fears

Hot US CPI and hawkish Fed rhetoric are pushing rate expectations higher and supporting the DXY; the dollar index has already risen 0.7% in 24 hours. With an RSI of 73.6, it is in overbought territory and short-term momentum is strong, but profit-taking risk increases at these levels. MACD is slightly above its signal line and price is above SMA20/SMA50, indicating an upward trend. Bond sell-offs and rate fears may keep dollar demand alive in the short term. Nevertheless, limited upside potential and volatility should be expected due to overbought conditions.

While hot US CPI data and hawkish Fed rhetoric trigger a bond selloff, short-term pressure may build on gold prices. GLD's RSI14 reading of 43 sits in neutral-to-weak territory and is trading below its MACD signal line, indicating weak momentum. However, with the price well above the SMA20 and SMA50, the medium-term trend remains strong. Although rate fears are negative for gold, inflationary pressures may provide partial support for precious metals. Therefore, I expect a slightly downward bias over the 1-3 day outlook, but there is insufficient confirmation for a sharp decline.