U.S. inflation surprised on the upside in August, nudging markets and trimming Bitcoin‘s early gains. The Consumer Price Index rose 0.4% month over month, above the 0.3% forecast, and was up 2.9% year over year.
Core CPI, which strips out volatile food and energy costs, climbed 0.3% in August, matching forecasts and July’s pace. On a year over year basis, core inflation held at 3.1%, also in line with expectations.
In the immediate aftermath, Bitcoin slipped about 0.5%, falling from roughly $114,300 to $113,700. U.S. stock futures gave up modest ground. The 10 year Treasury yield dipped about five basis points to 4.00%, the dollar firmed, and gold trimmed losses to trade near $3,675 per ounce.
Complicating the picture was the weekly Initial Jobless Claims report released alongside the CPI: claims rose to 263,000 from 236,000 the prior week, versus forecasts near 235,000. That deterioration in the labor market and the hotter-than-expected CPI leave policymakers with mixed signals.
Markets had been pricing a very high probability of a 25 basis point cut at next week’s Federal Reserve meeting – about 92% per CME FedWatch – with only an 8% chance of a 50 basis point move. Today’s inflation print likely dims expectations for the larger cut, though a 25 basis point easing still looks probable.
Why crypto traders should care: CPI Bitcoin reaction matters because Bitcoin’s volatility often tracks shifts in rate policy expectations and overall risk appetite. Even a modest CPI surprise can trigger short-term price swings as traders reprice future Fed action and the dollar’s strength impacts crypto flows. Investors should be prepared for elevated intraday volatility around the Fed decision and related macro releases.
What to watch next: the Fed meeting minutes and any Fed speakers before the policy decision, plus upcoming economic prints that could confirm whether inflation is stickier than anticipated.
Source: CoinDesk. Read the original coverage for full details.