Bitcoin, US Equities, and Gold Rally After US Inflation Report
Bitcoin, US equities, and gold experienced a rally following the release of the US headline Consumer Price Index (CPI) for July. The CPI increase matched estimates of 0.2%, leading to increased expectations of a pause in Fed interest rate hikes.
- Shelter costs, particularly, saw significant monthly and yearly increases, rising 7.7% and 4.4% respectively.
- Bitcoin (BTC) saw a 0.3% increase, reaching $29,594.60.
- Other cryptocurrencies, such as Ethereum (ETH) and Ripple’s XRP, also experienced marginal increases.
- US equity futures showed positive movement, with the Dow Jones Industrial Average rising 200 points.
- The price of gold reached $1,926.35 per ounce.
Annual Inflation Grows for the First Time in 13 Months
Despite the steady month-on-month CPI increase, the 0.2% annual increase from June marks the first growth in 13 months. However, both core and headline inflation still fall short of the Fed’s 2% target.
The nonfarm payrolls report for July indicates progress towards the Fed’s goal of “maximum employment,” contributing to overall market optimism. The CME’s FedWatch tool predicts a 91% chance of a Fed rate pause at 5.25%-5.5%.
While the financial markets may be celebrating, industry experts advise caution in interpreting these developments.
Hot Take
The US inflation report has had a positive effect on Bitcoin, US equities, and gold prices. With expectations of a Fed rate pause and the potential for increased market stability, investors are finding reasons to remain optimistic. However, it is important to approach these developments with caution, as the overall inflation situation still falls short of the Fed’s target and uncertainties remain.
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