Yesterday’s surprising fall in PPI to -0.1% (with forecasts +0.3%) conquered Bitcoin over USD 114,000, but we already know today’s CPI data! As expected, CPI growth to 2.9% did not surprise anyone a year, but the situation on the labor market is so!
Yesterday’s data surprised. Ppi down, bitcoin up
PPI data for August turned out to be a real bomb for financial markets. The production price indicator dropped by -0.1% of the month to a month, while economists predicted an increase of 0.3%. Even more surprising, the basic PPI (without food and energy) also dropped by -0.1%, instead of the expected growth by 0.3%.
The reaction of the cryptocurrency market was immediate – Bitcoin increased to $ 113,200 just after publication of the data. Ethereum and Solana also recorded significant increases, with a solo token in growths up to USD 225.
Why was this data so important? PPI is considered an indicator ahead of consumer inflation because it measures costs at the wholesale level. The third case of PPI deflation this year suggests that inflationary pressure at the producers level is weakening, which can translate into milder CPI data.
Today’s test – CPI and unemployment benefits
Economists predicted that CPI for August would increase by 0.3% per month and 2.9% per year, which would mean the highest annual increase from January 2025 (3.0%). The basic CPI was to remain at the level of 3.1% per year with a monthly increase of 0.3%.
Finally, all predictions worked, with CPI M/m slightly exceeding the forecasts. However, this is no matter. Inflation increases slowly, but remains below 3%, which gives the federal reserve space for the first discounts.
Key factors affecting today’s data:
- Trump duties: Duties’ income increased by over 150% compared to the previous fiscal year, and companies can no longer incur these costs themselves
- Food prices: Economists Goldman Sachs provide for food prices by 0.35%, driven, among others beef prices
- Service sector: Bank of America expects an increase in non -residential services by 0.4% per month
Unemployment data
However, what should be strongly worried about Powell and the company is data from the labor market. The number of declared preliminary unemployed has drastically exceeded all forecasts, which signals that the American economy is having a manual.
The latest data shows that the number of first applications for benefit increased to 263,000 in the week ending on August 30, compared to 236,000 last week.
Implications of new data for the Fed and Monetary Policy
Scenario in accordance with expectations (CPI 2.9% y/y)
Today’s CPI data will confirm the forecasts, therefore:
- We have a 100% probability of cutting feet with 25 base points at the September Fed meeting (September 17)
- The probability of a larger cut (50 pb) remains low
- Bitcoin will probably maintain levels above USD 113,000
As I have already mentioned, the data on the unemployed can be very concerned about the Fed. The simultaneous increase in inflation, and growing unemployment mean that the American economy enters the most dangerous phase – staglation.
Of course, the reasons for this state of affairs should be seen in the neglect of Powell, which is completely uncomfortable with the interest rate reduction for a very long time – despite the fact that the level of inflation in the US has long been stabilized.
The FED has already declared that the labor market is more important to him at the moment than inflation. It is somehow admitting the mistake that the reserve delayed the cuts for too long, which led to the current situation.
New readings force a federal reserve to start the cuts cycle. With the historical caution of Powell and the company, I would not count on cuts of 50 pb, but I would simply expect that the next cuts will not be the last this year.
Institutional perspective
CBEE has announced plans to launch 10-year-old bitcoin and Ethereum term contracts (planned for November 10), which is to provide institutions with a long-term exhibition without the need for constant rolling position.
This is another signal of growing institutional adoption, which can provide long -term support for cryptocurrency prices regardless of short -term macroeconomic fluctuations.
Bitcoin has been showing stabilization with the rest for some time, despite the turmoil associated with Trump’s customs, for which investors have already become resistant. This is a positive sign, indicating that BTC is becoming a stable activist of the institutional class.
A key moment for the cryptocurrency market in 2025
Today’s CPI data and unemployment benefits may decide not only the cryptocurrency market, but the entire FED monetary policy for the coming months. Yesterday’s fall in PPI has shown that wholesale inflation is weakening, but today’s CPI shows that consumer inflation revives, despite the weakening of the labor market.
Bitcoin faces a key test – Running a resistance to $ 113,800 with favorable statements regarding new data can open the way to new peaks.
FED decision this Wednesday, September 17. I would advise you to refrain from larger investment decisions by then.
Regardless of short -term fluctuations, the growing institutional adoption and structural changes in the cryptocurrency ecosystem suggest that each correction can be seen as a shopping opportunity for long -term investors – everything should be done with your head.
