The US business activity reportedly slowed moderately in May as higher prices cooled demand for services while renewed supply constraints because of pandemic lockdowns in China and the ongoing conflict in Ukraine hampered production at factories.

Because of this, the market pricing of what the US Federal Reserve will do in 2022 came off at 185 basis points (bps) versus 195 bps on Monday.

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The US dollar fell across the board on Tuesday due to a selloff in US Treasury yields and the release of downbeat US data. Usually, the dollar is a safe haven, the money goes home into the dollar when there is a risk elsewhere, but for the three weeks, the dollar has also been weakening. In particular, it sold off against the Yen and the Swiss franc.

Brent oil prices are at about $114 per barrel.

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The question is, what more can happen? Will the weakened data force the market to at least ask the question of how will the Fed react? Are higher rates already slowing growth as desired by the Fed, and consequently, can the Fed start to pause this tightening cycle?

Nobody knows the answers yet, but the market does know that the Fed is only getting started. To talk about the pause is hard.

Watch the accompanying video of CNBC-TV18’s Prashant Nair for more details.

Catch latest market updates with CNBCTV18.com’s blog

First Published:May 25, 2022 9:29 AM IST