Why Is Crypto Moving Higher Today?

Risk markets started rocketing higher right after the 0830a ET timeframe – why? It’s because the Consumer Price Index report (CPI) came out today and showed that the pace of inflation hitting the consumer was SLOWING, but not falling. 

The headline number shows that inflation hitting the consumer is 7.1% higher than this point in time vs. a year ago, which is the number that the media focuses on, but is a backward-looking number that the market no longer cares about. Consumer yes, market no. 

The number that REALLY matters is the month-month number of .1%. This shows that inflation to the consumer is still RISING but the impact is SLOWING, having just been .4% last month. The expectation is that we’re close to the apogee of short-term inflation which just might encourage the Fed to slow down the rate hike cycle. It’s the proverbial “light at the end of the tunnel.” 

To this point, we’re seeing the Dollar index drop as well as interest rates soften, although both of these are off of their lows of the day. 

We still have yet to get past Jerome Powell’s rate release verbiage tomorrow, with the associated press conference. Expect more volatility tomorrow across the board before asset prices stabilize in the short term.