August CPI drops today, and I'm leaning bullish into it. Here's my reasoning.
Yes, the setup looks hawkish on paper. Nonfarm payrolls smashed expectations (162K vs ~56K forecast), and yesterday's PPI came in hot at 5.4% annually. That's usually the recipe for “the Fed hikes, risk assets get hit.”
But here's why I'm not worried.
CPI has actually been cooling for two straight months... 3.4% in July, down from 3.5% in June. Even with a hot PPI print, consumer-facing inflation has shown a downward trend, and the Fed's preferred gauge, PCE, tends to matter more to them than a single CPI headline.
My read: even if today's number comes in slightly hot, it likely won't be hot enough to create a much bigger hawkish shock than the market is already pricing in.
And if it comes in in-line or cooler, that's a green light for risk assets, including crypto, going into next week's FOMC meeting.
A hotter Core CPI reading could revive “higher-for-longer” Fed fears and trigger a fast risk-off reaction. An in-line or softer number may give crypto room for relief—but expect whipsaws either way.
The first move after the release may be emotional. The more meaningful signal is whether BTC holds its direction once the initial volatility settles.
⏰ 6:00 PM IST What matters more to you today: the CPI number or BTC’s reaction after it?
The market is focused on Iran and the Strait of Hormuz, but another key route is now coming into view: Bab al-Mandab, the passage linking the Red Sea to the Indian Ocean.
If shipping faces disruption around both routes, it would not just be a Yemen or Middle East story. Freight costs could rise, oil supply fears could intensify, and inflation-sensitive markets may react.
That is why oil moving above $100 matters. Traders are starting to price in the risk that a regional conflict affects global energy flows.
For crypto and other risk assets, the main issue is not the conflict itself—it is whether higher oil, inflation worries, and rising yields lead investors to reduce risk exposure.
August CPI drops today, and I'm leaning bullish into it. Here's my reasoning.
Yes, the setup looks hawkish on paper. Nonfarm payrolls smashed expectations (162K vs ~56K forecast), and yesterday's PPI came in hot at 5.4% annually. That's usually the recipe for “the Fed hikes, risk assets get hit.”
But here's why I'm not worried.
CPI has actually been cooling for two straight months... 3.4% in July, down from 3.5% in June. Even with a hot PPI print, consumer-facing inflation has shown a downward trend, and the Fed's preferred gauge, PCE, tends to matter more to them than a single CPI headline.
My read: even if today's number comes in slightly hot, it likely won't be hot enough to create a much bigger hawkish shock than the market is already pricing in.
And if it comes in in-line or cooler, that's a green light for risk assets, including crypto, going into next week's FOMC meeting.
🧵 Why the "boring" bond market might explain your crypto portfolio's mood this week.
1/ The US 10-year Treasury yield just hit 4.85%, its highest since November 2023.
2/ In simple words: this is the interest rate the government pays to borrow for 10 years. When it rises fast, borrowing gets more expensive across the entire economy, mortgages, credit cards, business loans.
3/ Why now: oil just crossed $101/barrel due to the Iran conflict, stoking inflation fears. The US also has a $2 trillion deficit, and a recent bond buyback announcement disappointed investors expecting more support.
4/ The Dow already dropped 400 points reacting to this.
5/ For crypto: rising yields make "safe" bonds more attractive relative to risk assets. Money sometimes rotates away from BTC/alts when this happens fast.
6/ This doesn't mean panic. It means understanding why price action might feel heavier this week, even without coin-specific news.