BlackRock is closely watching this Wednesday’s release of US inflation data for May, regarding it as the first clear signal of how persistent inflation—fueled in part by recent US-Iran tensions and their impact on energy prices—could unfold. The asset manager’s weekly market review emphasized that the full extent of this effect remains uncertain and will depend on how the regional conflict develops.
All eyes on the May CPI numbers
The US Consumer Price Index (CPI) for May will be released on Wednesday at 08:30 ET (15:30 Turkish time). According to a Reuters survey, economists forecast a year-on-year CPI increase of 4.2% for May. If this prediction holds, it will exceed April’s 3.8% and represent the sharpest annual jump since April 2023.
The BlackRock Investment Institute expects the May US inflation data to provide greater clarity about how the Middle East-driven energy shock is contributing to existing price pressures in the US. However, the institute notes that the true magnitude of the shock has yet to emerge.
As one of the world’s largest asset managers, BlackRock’s perspective is closely tracked by global markets. The group’s analysis indicates that this anticipated acceleration would again highlight how inflation remains well above the Federal Reserve’s 2% target.
Rate expectations and potential impact on crypto markets
A possible acceleration in inflation could further weaken market expectations for rate cuts that were priced in at the beginning of the year. Such a scenario may strengthen views that the Fed’s next move will be a rate hike, not a cut. In general, higher borrowing costs tend to dampen appetite for riskier assets, including cryptocurrencies.
For this reason, a CPI reading above expectations is seen as likely to increase downward pressure on the crypto market. Bitcoin, for example, saw a steep drop last week, falling around 14% and sinking below the $60,000 mark. Market participants are now watching to see whether the inflation data and resulting rate expectations will drive fresh volatility in crypto prices.
Attention focused on the Strait of Hormuz
One of the key risks highlighted by BlackRock is the possibility of the Strait of Hormuz remaining closed for an extended period, potentially into July. According to the firm, a prolonged disruption at this crucial chokepoint could place energy shocks squarely at the center of inflation dynamics. In particular, the prospect of US oil inventories falling to four-decade lows could make this effect even more visible.
Mini glossary: The Strait of Hormuz is the narrow waterway connecting the Persian Gulf with the Gulf of Oman, through which a significant share of global oil shipments pass. Any prolonged disruption in this corridor can accelerate energy price swings and influence inflation expectations worldwide.
BlackRock’s assessment points out that a closure of the Strait of Hormuz lasting into July could make the shock’s impact even more prominent, especially if it coincides with a sharp drop in US oil stocks.
For markets, Wednesday’s data will not only signal the direction of US inflation pressures but also offer valuable insight into how energy-driven risks could shape monetary policy and crypto assets in the coming months.
