Data from the Bureau of Labor Statistics (BLS) showed that the U.S. inflation rate, as measured by the Consumer Price Index (CPI), slipped to 3.0% year-on-year in June from 4.0% in May, lower than the 3.1% drop in June. On a monthly basis, the CPI rose 0.2% in June, compared with a 0.1% increase in May and an expected 0.3% increase.
The core consumer price index, which excludes volatile food and energy costs, fell to 4.8% from 5.3% previously, compared with expectations for 5.0%; the core CPI was 0.2% in June, 0.4% in May, and 0.3% forecast.
The price of Bitcoin (BTC), which has spent much of the past few days stuck between $30,000 and $31,000, rose slightly to $30,900 immediately after the report was released, but has since given up those gains to trade back just below $30,800.
Today’s report showed that overall inflation continued to decline, falling 3% in June from a peak of 9.1% in 2022. Perhaps more importantly for Fed policymakers, core inflation finally began to move the needle — falling to 4.8% from 5.3% — after remaining stubbornly above 5% this year.
Still, markets and the Fed (if recent speakers are to be believed) continue to expect another rate hike when the Fed’s rate-setting Federal Open Market Committee (FOMC) meets later this month. The CME’s FedWatch tool puts the odds of a rate hike at the FOMC’s July 25-26 meeting at 91.1%.
While Bitcoin barely moved on the good news about inflation, traditional markets were changing, with the 10-year U.S. Treasury yield falling 6 basis points to 3.91% and the 2-year Treasury yield falling 14 basis points to 4.73%. The dollar index fell 0.5% and stock index futures opened up nearly 1%.
