Holy cow! The market pumped on CPI results today, and Bitcoin cracked $90,000 for the first time, even though the data wasn’t entirely positive.
JPOW did it again. Is there anything he can’t do?
All jokes aside, inflation is retaking center stage as signs of the Trump rally slowing emerge. Today’s October CPI results revealed a 2.6% increase year-on-year, matching expectations. This report precedes the Fed’s December meeting, with markets betting 66% on a third rate cut this year.
Inflation was just reported at 2.6%.
We are headed in the wrong direction.
The American people just elected a new President with the mandate to get inflation down now!
— Anthony Pompliano 🌪 (@APompliano) November 13, 2024
Trump’s win ignited a market frenzy that is cooling off; his social media stock DJT and the Russell 2000 have lost some steam. Recently, stock futures slipped, ending the S&P 500 and Nasdaq’s five-day streak, and treasury yields eased, settling the 10-year at 4.43%.
Additionally, Bitcoin
Price Trading volume in 24h Last 7d price movement is lingering at nearly $89,000 after breaking $90,000.
There are many people waiting for a market pullback, but here’s what’s likely to happen to BTC now that the CPI results are out.
CPI Results Today: A Closer Look
Before the inflation report, analysts forecasted a subtle 0.3% bump in October’s core consumer prices, the third month in a row for this climb. This pattern underlines a stubborn inflation scene, with core CPI steady at 3.3% year-over-year.
Samuel Tombs from Pantheon Macroeconomics predicts a “3.5% bounce in seasonally adjusted prices for used cars,” alongside a 2% rise in hotel and motel prices due to increased demand from recent hurricanes.
( bls.gov )
Rising inflation is complicating the Fed’s rate cut plans. The market now sees a 59% chance of a quarter-point cut in December, down from 77% before the election.
Energy prices dropped 4.9% annually, whereas food prices climbed 2.1%. Despite cooling inflation elsewhere, shelter costs fueled the CPI surge. The shelter index, a heavyweight in the index, rose 0.4% in October, doubling September’s move, and was up 4.9% annually, contributing to more than half the CPI’s gain.
Used vehicle prices ascended 2.7% this month, while motor vehicle insurance fell 0.1% but remained 14% higher annually. Airline fares soared 3.2%, and eggs plummeted 6.4% but stayed 30.4% above last year. The BLS reported that inflation-adjusted hourly earnings inched up 0.1% for the month and 1.4% annually. Inflation drifted further from the Fed’s 2% target, potentially complicating monetary policy as a new administration steps in come January.
( Bureau of Labor Statistics )
Fed Chief Jerome Powell insists inflation is on track to hit the 2% target, despite some bumps. His comments hint at a likely rate cut, but future moves remain hazy. With steady inflation in non-housing sectors and little pressure from the job market, caution is the watchword.
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What’s Next For Bitcoin and Tech?
The upcoming CPI report is not just about numbers; it’s a pulse check on the US economy. The data will offer insights into consumer behavior, price stability, and the effectiveness of fiscal policies.
While inflation is expected to inch closer to the Fed’s target, external factors such as fiscal policy uncertainties under the new administration could introduce new variables.
With no surprises from the CPI, the Fed seems poised to cut rates again in December. Next year’s outlook is murkier due to potential tariffs and the shifting Trump administration policies.
According to Ellen Zentner, Morgan Stanley Wealth Management’s chief economic strategist, markets are already considering fewer rate cuts in 2025 and possibly pausing as soon as January.
