CPI data released, attracting market attention
The U.S. Consumer Price Index (CPI) data for October was released on the evening of the 13th. The overall CPI increased by 2.6% compared with the same period last year, and the monthly growth rate was 0.2%, both in line with market expectations. Core CPI, which excludes food and energy, rose 3.3% annually and 0.3% monthly, also in line with estimates. The data showed that although inflationary pressures have eased, they are still above the Fed's target.
Source: Investing U.S. CPI data for October was in line with expectations
The release of CPI data cast doubt among investors on whether the Federal Reserve will cut interest rates in December. Previously, Minneapolis Fed President Neel Kashkari warned that if inflation unexpectedly picks up in the next month, the Fed may have to reconsider its plan to cut interest rates. Market expectations for another 0.25 percentage point rate cut in December rose to 82.8% from 58% the previous day, data from the CME FedWatch tool showed.
Source: CME FedWatch market forecasts an 82.8% chance of a one-point interest rate cut in December
Bitcoin price fluctuates, investors remain enthusiastic
Ahead of the inflation data, Bitcoin price had slipped to $86,200 from $89,000 yesterday. However, after the data was released, Bitcoin quickly rebounded, reaching a peak of $93,322 (at the time of writing, the price of Bitcoin was $89,689). Analyst Michaël van de Poppe noted that a pullback to $80,000 would be an ideal entry point, predicting a price target of $100,000.
Source: TradingView Bitcoin reaches new high of $93,322
Meanwhile, long-term holders’ confidence in Bitcoin remains strong. Despite the recent price gains, long-term holders are not showing extreme greed, according to Glassnode data. Their net unrealized profit/loss (LTH-NUPL) is still in the "greedy" zone and is still far away from the "extreme greed" of all-time highs, which means Bitcoin still has room to rise.
Source: Ali Long-term holders’ confidence in Bitcoin remains firm
Inflation and market outlook, Fed policy becomes focus
With the CPI data in line with expectations, it temporarily eased market concerns about rising inflation, but the Fed's next move remains unclear. Jeffrey Roach, chief economist at LPL Financial, said:
"Easing inflation gives the Fed some room to cut interest rates next month, but they are likely to pause in January. Stronger-than-expected economic growth could keep U.S. bond yields high."
In addition, the trend of rental prices is also an important factor affecting CPI. Morgan Stanley economist Diego Anzoategui predicts that "landlord equivalent rent" (OER) may have increased slightly in October, but the long-term trend will gradually decline. This is an important observation indicator for investors and legislators who are concerned about inflation trends.
Market reaction and future expectations
U.S. stocks were mixed after the release of CPI data.
The Dow Jones Industrial Average rose 47.21 points, or 0.11%, to close at 43,958.19 points.
The Nasdaq: fell 50.68 points, or 0.26%, to 19,230.72.
S&P 500: rose 1.39 points, or 0.0%, to 5,985.38.
Philadelphia Semiconductor Index: fell 102.34 points, or 2.00%, to close at 5,006.29 points.
NYSE FANG+ Index: Up 6.45 points, or 0.051%, to close at 12,527.68.
Investors are digesting the latest economic data and possible policy directions from the Federal Reserve.
Cryptocurrency markets such as Bitcoin have experienced fluctuations due to the release of inflation data, but the overall trend is still favored by investors. The performance of cryptocurrencies is likely to remain under scrutiny in the coming weeks as demand for safe-haven assets increases. However, the Federal Reserve's policy decision will be a key variable that affects the market direction, and investors need to pay close attention to the economic data and policy statements that will be announced soon.
[Disclaimer] There are risks in the market, so investment needs to be cautious. This article does not constitute investment advice, and users should consider whether any opinions, views or conclusions contained in this article are appropriate for their particular circumstances. Invest accordingly and do so at your own risk.
"U.S. CPI in October was in line with expectations! Bitcoin surges by another 93,000, is the Fed expected to cut interest rates again? "This article was first published in "CryptoCity"
