US CPI August 2024 results and rate cut outlook
Quote374 words
Breaks down the August CPI print and what it means for the Fed. Inflation is cooling, the market expects a 25bps cut, and the author sees a bright Uptober outlook but high volatility.
Key claims
Headline CPI 0.2% MoM and 2.5% YoY, lowest since Feb 2021
Core CPI 0.3% MoM and 3.2% YoY
Market expects 25bps at the Sept 18 FOMC
Where are the markets going from here?
It's a big week for macro.
First, we had the Trump vs. Harris debate impact election odds.
Yesterday, US inflation data was released.
Ready for the Fed Rate Cuts next week?
Macro Alpha 馃搳猡碉笍
CPI is up 0.2% MoM in August, the same as in July, and in line with expectations.
The YoY slowed for a 5th consecutive month to 2.5%, which is the lowest since Feb 2021. It's down from 2.9% in July, and aligned with forecasts.
Core CPI, excluding food and energy, increased by 0.3% month-over-month, slightly surpassing the 0.2% consensus and July's 0.2% level.
YoY, core CPI rose by 3.2%, the lowest rate since April 2021, matching both July's pace and consensus estimates.
What does it mean? 馃
Overall this is good news.
Based on the labour market data from last week (not so good, calling for rate cuts) and inflation data released yesterday (inflation cooling partially), the market expects the Fed to cut rates by 25bps next week (FOMC meeting on 18th).
It will likely not be the only cut, but rather the first one of a series of rate cuts in the next months, as the Fed pivots to a more lax monetary policy in an attempt to strengthen the economy and prevent it from sliding into a full-blown recession.
50bps cut still on the table too, but because it might be perceived as an admission to policy mistakes (too strict in past), and subsequently a panic reaction by the Fed (and confirmation of the feared recession), I don't think that will happen. Fed will also still want to stay cautious with regards to the looming inflationary pressures.
Overall, I hence believe the outlook for Uptober is bright with inflation largely cooling down, and step-by-step rate cuts taking pressure off the economy.
Depending on how the macro environment evolves, we might start to see the market recover more broadly soon with $BTC likely leading the way into an Altseason.
However, with the US economy still tumbling and the presidential election just 60 days away, uncertainty remains high and volatility is to be expected.
Hopium.
Linking back to this here too wrt the debate outcome and initial market perception of it. 猡碉笍
x.com/zerokn0wledge_/status/1833733739253543246
QUOTING @zerokn0wledge_
饾悡-饾煏 饾悆饾悮饾惒饾惉 饾惌饾惃 饾惌饾悺饾悶 饾悈饾悗饾悓饾悅 饾悓饾悶饾悶饾惌饾悽饾惂饾悹 饾悮饾惂饾悵 饾煆饾惉饾惌 饾悜饾悮饾惌饾悶 饾悅饾惍饾惌饾惉 饾悽饾惂 饾煇.饾煋 饾悩饾悶饾悮饾惈饾惉 猡碉笍 The Cleveland Fed is estimating the lowest CPI increase since February 2021, signalling that inflation is easing significantly. This would put core PCE index, the Fed's preferred measure of inflation, coming in arou
饾悡-饾煏 饾悆饾悮饾惒饾惉 饾惌饾惃 饾惌饾悺饾悶 饾悈饾悗饾悓饾悅 饾悓饾悶饾悶饾惌饾悽饾惂饾悹 饾悮饾惂饾悵 饾煆饾惉饾惌 饾悜饾悮饾惌饾悶 饾悅饾惍饾惌饾惉 饾悽饾惂 饾煇.饾煋 饾悩饾悶饾悮饾惈饾惉 猡碉笍 The Cleveland Fed is estimating the lowest CPI increase since February 2021, signalling that inflation is easing significantly. This would put core PCE index, the Fed's preferred measure of inflation, coming in arou
4 images on X
What came next 路 since 12 Sep 2024
Show how the covered asset moved
This data piece reports the numbers without making a call on the token, so price moves since publication are shown as market context.
Covered, no call
Since then
Zero has written 7 more pieces on $BTC since this one.
- Bunker mode explained: AI, ECDSA risk and 6.26M exposed BTCCovers $BTC
- Why the crypto bottom gets engineered: long-end yields, Fed and catalystsBullish call on $BTC
- Central banks bought 863 tonnes of gold, zero bought BitcoinCovers $BTC
- Bitcoin as regime change insurance, not a debasement hedgeCovers $BTC
Daily closes in USD from DefiLlama and Yahoo Finance. Only a bullish or bearish call in a thesis or market take is tracked; explainers, lists, maps and mentions are neutral context. Not financial advice.