On Thursday, new data revealed that the U.S. Consumer Price Index (CPI) for September recorded an annual growth rate of 2.4%, slightly above the forecast of 2.3% but down from the previous 2.5%. Meanwhile, core CPI rose to 3.3%, surpassing both market expectations and the prior figure of 3.2%. The labor market also showed signs of strain, with initial jobless claims climbing to 258,000, exceeding both the forecast of 230,000 and the previous 225,000. Despite CPI achieving six consecutive declines—its lowest since February 2021—the numbers still came in higher than anticipated. Analysts suggest that if jobless claims had remained within expectations, stock futures would have dipped further, potentially prompting the Federal Reserve to accelerate its interest rate cuts to support economic momentum.
The volatility in these economic indicators adds complexity ahead of the November 5 elections, with the Fed’s actions under increased scrutiny. Market participants are now betting on a 25 basis point rate cut in the coming November meeting, with further easing likely into next year. Fed Governor Austan Goolsbee commented that the broader outlook suggests inflation will continue to decline significantly over the next 12 to 18 months, while interest rates are expected to drop progressively toward a neutral level around 3%. Michael Brown, an economic analyst, noted that the latest CPI results are unlikely to shift the Fed’s course drastically, and the two remaining meetings in 2024 may each bring a 25-basis-point cut.
The financial market’s response to the inflation data highlights the challenges of balancing risk. Goldman Sachs acknowledged the stronger-than-expected CPI report, with a particular focus on core inflation. However, the labor market remains the primary concern for the Fed’s future policies. JPMorgan's David Kelly emphasized that the Fed may gradually reduce rates as the economy shows no immediate overheating signals. Despite geopolitical uncertainties and an unpredictable election, the rising U.S. stock market suggests a growing appetite for risk. Crypto markets are mirroring this sentiment, with meme coins surging and BTC futures seeing reduced bearish bets, signaling increased optimism.
In the medium term, institutional players remain bullish. QCP Capital expressed confidence in accumulating crypto assets despite short-term volatility, with Bitcoin expected to benefit from upcoming events like Fed rate cuts and market liquidity injections from FTX creditor repayments. Bitwise CIO Matt Hougan suggested that if election results and economic conditions align, Bitcoin could rebound to $80,000 in Q4. To push it further to $100,000, the entire crypto market would need a strong recovery to lift investor sentiment. While Bitcoin's recent dip below $60,000 reflects market tension, investors remain forward-looking, anticipating a favorable shift driven by these unfolding events. The outlook may feel like "ice and fire," but seasoned investors continue to bet on the market's resilience and the potential for another bull run.
#cpi #CPI_DATA #USRateCutExpected #USPPIAboveExpectations #10MTradersLeague
