The U.S. inflation rate as measured by the Consumer Price Index (CPI) slipped to 3.0% on a year-over-year basis in June from 4.0% in May, according to the Bureau of Labor Statistics (BLS). Expectations were for a decline to 3.1%. The price of bitcoin (BTC) – which has been in a holding pattern between $30,000 and $31,000 for much of the past few days – rose modestly to $30,900 in the immediate aftermath of the report, but subsequently gave back that gain, returning to just under $30,800.
The core CPI, which strips out volatile food and energy costs, fell to 4.8% from 5.3% previously and against forecasts for 5.0%; the monthly core CPI was 0.2% in June versus 0.4% in May and forecasts for 0.3%.
Today's report shows headline inflation continuing to decline, with June's 3% down from a peak of 9.1% in 2022. Maybe more importantly to the policymakers at the Federal Reserve, the core rate of inflation finally began to budge – to 4.8% from 5.3% – after stubbornly remaining above 5% this year. That 4.8% year-over-year level was the slowest pace since October 2021.
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Nevertheless, markets and the Fed (if recent speakers are to be believed) continue to anticipate another rate hike when the central bank's rate-setting Federal Open Market Committee (FOMC) meets later this month. The CME's FedWatch tool shows a 91.1% chance of the FOMC boosting rates at its July 25-26 meeting.
Though bitcoin is barely budging on the good inflation news, traditional markets are on the move, with the U.S. 10-year Treasury yield down 6 basis points to 3.91% and the 2-year yield off 14 basis points to 4.73%. The dollar index has slipped 0.5% and stock index futures are pointing to a nearly 1% gain at the open.