Financial markets are expected to rally following the latest CPI data released by the United States Labour Department. The better-than-expected report showed a slowing inflation rate on a monthly basis as well as from the previous year. According to CPI data, United States inflation cooled with figures dropping to 0.1% from the previous month.
This took yearly figures to 3%, its lowest point since to pandemic. The yearly drop is the first in about three years sparking positive sentiments for favorable macro conditions in traditional and digital markets. All time index rate fell from 3.3% in May consumer prices declined. While gas prices plunged 3.8%, shelter and food prices went up 0.2%.
CPI To Rally Markets
Financial markets including stocks, crypto assets, and gold prices have recorded a shift in sentiment pots the U.S. CPI data. Gold skyrocketed above $2,400 as hopes of interest rate cuts by the Federal Reserve grew. The precious metal tapped $2,414, surging over 1.8% amid intra-day trading. Similar sentiments were also seen in stocks although some assets declined.
Chris Larkin, Morgan Stanley’s E-Trade MD of Trading and Investing explained that the CPI data takes the financial market one step closer to anticipated interest rate cuts by the Feds. “A lot can happen between now and September 18, but unless most of the numbers pivot back into ‘hot’ territory, the Fed’s reasoning for not cutting rates may no longer be justified.”
This goes closer to the Federal Reserve’s target of 2% yearly inflation and has held its benchmark interest rate amid progressive declining inflation over the years.
Another Boost For Crypto
Positive macroeconomic sentiments serve as a strong indication for inflows to the crypto markets. As the Feds ease pressure on the markets, investors often send more funds to risky assets signaling growth for Bitcoin and other assets. Meme coins are also tipped to make another return following the anticipated jump. At press time, Bitcoin trades at $57,545, a 0.3% drop in the last 24 hours while the wider market cap is at $2.12 trillion hours after the CPI data release.
