Bitcoin slips as traders lift July Fed rate hike bets ahead of Inflation report

West Texas Intermediate crude futures have surged to nearly $80 a barrel from $67 at the start of the month, stoking fresh concerns about inflation.

Focus on CPI and Warsh testimony

Investors will receive a fresh read on price pressures Tuesday when the Labor Department releases the June consumer-price index at 8:30 a.m. ET.

Economists surveyed by Bloomberg forecast that headline CPI will fall below a 4% annual rate. The report is expected to show the first declines in both headline and core inflation since January, following May's readings of 4.2% and 2.9%, respectively.

Even if the figures meet expectations, they risk being viewed as backward-looking in light of the recent oil price surge. Should inflation instead prove more persistent, the data could amplify concerns about the Fed's path forward.

Attention will then turn to Mr. Warsh's testimony on Capitol Hill. Given the Fed chair's preference for limited forward guidance, investors will be watching closely for any signals on rates and inflation.

According to analysts at ING, he could “if he chooses, emphasize the tameness of inflation expectations.”

They added that Mr. Warsh “has enough ammunition here to ride the rate hike risk and instead hold pat. Even if he comes under pressure to hike, the richness attached to the 5yr part of the curve tells us that any hike (if delivered) is likely to be subsequently reversed, with the prospect still for bigger cuts than hikes.”