【US August CPI holds at 3.4%, rate-hike bets jump to nearly 90% overnight 😳】
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US August CPI rose 3.4% year over year, unchanged from July, which also matches market expectations. Core CPI rose 0.3% month over month, 0.1 percentage points above the forecast—the only surprise. After the data was released, Bitcoin and gold both dropped within seconds, and it took only a few minutes to recover most of the losses. Rate-hike odds jumped from around 70% straight to nearly 90%, and the market voted with money. This is the final major inflation data release before next week’s Federal Reserve meeting. Neither the overall figure nor the core showed any clear signs of cooling.
First, separate the two numbers: headline (overall) and core—their directions often differ. Headline CPI rose 0.4% month over month, which doesn’t look that alarming. Core, however, is running hot. Gasoline rose 3.9% in a single month, accounting for more than a third of the total index increase. Energy costs are up 16.3% year over year, while fuel oil is up 52% year over year. Housing costs also rebounded by 0.3%. As long as oil prices don’t come down, inflation can’t easily fall on its own. This time, the increase isn’t just one category—it’s spread across a whole swath.
What’s really worth watching is that the expectation gap is only 0.1 percentage points, yet the market reaction is so big. The Fed’s benchmark rate has been stuck between 3.5% and 3.75% all year—unchanged. Fed Chair Waller has said publicly that if the data doesn’t improve, they still have work to do. Analysts are blunt: this time, there’s almost no reason to keep rates pinned down. Next Wednesday’s vote is practically pre-locked by the inflation data released early.
For crypto, a rate hike pushes the risk-free rate up a notch, putting downward pressure on valuations first. The yield on 2-year US Treasuries jumped 4.6 basis points—short-term funding prices got more expensive. Spot ETFs have seen consecutive net outflows these past few days, and the coin price has been moving sideways around 77,000. This flash crash and rebound in Bitcoin shows that the bulls haven’t given up yet. Crypto’s sensitivity to interest rates has always been ranked ahead of all other assets. The real pressure point is next Wednesday, not this single pinprick of today.
Do you think next week’s Fed will hike 25 basis points, or keep rates unchanged? Let’s discuss in the comments.
Join the X Mr. fan chat group on the homepage 🔥
US August CPI rose 3.4% year over year, unchanged from July, which also matches market expectations. Core CPI rose 0.3% month over month, 0.1 percentage points above the forecast—the only surprise. After the data was released, Bitcoin and gold both dropped within seconds, and it took only a few minutes to recover most of the losses. Rate-hike odds jumped from around 70% straight to nearly 90%, and the market voted with money. This is the final major inflation data release before next week’s Federal Reserve meeting. Neither the overall figure nor the core showed any clear signs of cooling.
First, separate the two numbers: headline (overall) and core—their directions often differ. Headline CPI rose 0.4% month over month, which doesn’t look that alarming. Core, however, is running hot. Gasoline rose 3.9% in a single month, accounting for more than a third of the total index increase. Energy costs are up 16.3% year over year, while fuel oil is up 52% year over year. Housing costs also rebounded by 0.3%. As long as oil prices don’t come down, inflation can’t easily fall on its own. This time, the increase isn’t just one category—it’s spread across a whole swath.
What’s really worth watching is that the expectation gap is only 0.1 percentage points, yet the market reaction is so big. The Fed’s benchmark rate has been stuck between 3.5% and 3.75% all year—unchanged. Fed Chair Waller has said publicly that if the data doesn’t improve, they still have work to do. Analysts are blunt: this time, there’s almost no reason to keep rates pinned down. Next Wednesday’s vote is practically pre-locked by the inflation data released early.
For crypto, a rate hike pushes the risk-free rate up a notch, putting downward pressure on valuations first. The yield on 2-year US Treasuries jumped 4.6 basis points—short-term funding prices got more expensive. Spot ETFs have seen consecutive net outflows these past few days, and the coin price has been moving sideways around 77,000. This flash crash and rebound in Bitcoin shows that the bulls haven’t given up yet. Crypto’s sensitivity to interest rates has always been ranked ahead of all other assets. The real pressure point is next Wednesday, not this single pinprick of today.
Do you think next week’s Fed will hike 25 basis points, or keep rates unchanged? Let’s discuss in the comments.
