π Markets Split on Inflation Data
Stocks, Bitcoin, and gold rallied after core CPI fell to 2.4%, its lowest level in over 5 years. Headline CPI held at 3.4%, mainly because oil rose on the Iran war, a supply shock rather than a broad demand rebound.
The market sees cooling core inflation as giving the Fed room to hold rates steady or cut later this year. Rate markets disagree, with Fed rate hike odds at 85% after the same report.
The difference is in the time frame. Monthly core CPI rose 0.3% versus 0.2% expected, driven by supercore services, which exclude both energy and shelter. That suggests real demand pressure, not just the impact of oil.
Risk assets are reacting to the 5-year trend in annual inflation. Rate markets are reacting to one hot monthly reading. Both views cannot hold for long.
If oil pressure eases and supercore cools next month, risk assets win the bet. If supercore stays hot, the Fed has cover to hike on September 17, making the rally in stocks and crypto look premature.
βοΈ @venture
π Markets Split on Inflation Data Stocks, Bitcoin, and gold rallied after core CPI fell to 2.
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