The U.S. data for August CPI will be released on Friday at 8:30 a.m. Eastern Time. This is the last set of consumer inflation data before the Federal Reserve's September interest rate meeting, and the market's sensitivity to this data has clearly increased. Bitcoin is currently trading below $80,000, and U.S. stocks are also weak under the pressure of rising U.S. Treasury yields and oil prices.
The market focuses on core inflation.
Wall Street currently expects that in August, the overall CPI will rise by 3.4% year-on-year and 0.4% month-on-month; the core CPI is expected to rise by 2.4% year-on-year and 0.2% month-on-month.
Compared to the overall data, the market places more emphasis on the core CPI. The reason is that core inflation usually reflects more accurately whether price pressures are spreading, and it is also an indicator that the Federal Reserve takes more seriously when judging the subsequent interest rate path.
In July, U.S. inflation rose by only 0.1% month-on-month, with falling gasoline prices playing a certain restraining role at that time. Entering August, the average price of gasoline in the United States has rebounded, putting overall CPI under upward pressure. The focus of the market now is whether the rise in energy prices will remain limited to a single sector or whether it will further spread to transportation and other consumer expenditures.
Oil prices and PPI increase pressure
Apart from CPI, the latest data for August in the United States, PPI, also reinforced market caution. The figures show that in August, PPI in the US rose by 0.4% month-on-month and 5.4% year-on-year. This indicates that upward price pressures have not significantly eased.
If the core CPI announced tonight remains moderate, the market may consider that the recent oil price shocks are short-term, and the policy pressure on the Federal Reserve will not increase significantly. On the contrary, if the core data exceeds expectations, the market's bets on "higher interest rates lasting longer" may heat up further.
Bitcoin and U.S. stocks await results
If the overall CPI is below 3.4%, or the core CPI falls by more than 0.2% on a month-on-month basis, concerns about inflation stickiness in the market may ease. At that time, U.S. Treasury yields and the dollar could decline, and the pressure on Bitcoin and growth stocks is expected to be alleviated.
If the data generally meets expectations, the direction of discussion at the Federal Reserve's September meeting is not likely to change significantly. After short-term market fluctuations, the focus will once again turn to the interest rate decision next week. If the core CPI is higher than 0.2%, especially if both the overall and core data exceed expectations, the market may start to incorporate more tightening policy prospects.
Before Bitcoin released its data, it fluctuated around $77,500. Although it has rebounded from the mid-$60,000 range recently, it has encountered resistance in the $80,000 to $84,000 range and has not yet managed to stabilize at this key level again. On the U.S. stock market, the S&P 500 index fell by 0.6% on Thursday, the Nasdaq index fell by 0.7%, and the Dow Jones index fell by 0.6%. The yield on 10-year U.S. Treasury bonds rose to around 4.95%.
