šŗšø US CPI came in at 3.4% YoY, exactly in line with expectations.
At first glance, that looks calm.
But the real story was monthly core inflation.
Core CPI came in hotter than expected, giving markets another reason to price a more hawkish Fed path. Traders are now pricing roughly a 90% probability of a 25bps rate hike in September.
š The key takeaway:
3.4% headline inflation being unchanged does not mean the market is pricing a pause.
The monthly core number did the talking.
A September 25bps hike is now becoming the base case, putting pressure on:
š TLT ā higher yields are a headwind
šµ DXY ā hawkish Fed expectations support the dollar
āæ BTC ā higher yields and a stronger dollar can create short-term pressure
š SPY ā higher discount rates could keep equities volatile
The headline looked stable.
The monthly core print changed the trade.
If you want, I can also make it more aggressive/viral like a crypto Twitter analyst, with shorter lines and stronger hooks.