Bitcoin popped higher on Friday after the U.S. Bureau of Labor Statistics reported a softer-than-expected reading on core inflation in March. The headline Consumer Price Index (CPI) rose 0.9% month-over-month, matching economists' forecasts and up from 0.3% in February. On an annual basis, CPI came in at 3.3%, also as expected, versus 2.4% prior.
But the key metric — core CPI, which strips out food and energy — increased just 0.2% month-over-month, below the 0.3% consensus estimate and unchanged from February's 0.2% rise. The yearly core CPI rate landed at 2.6%, expectations had called for 2.7%, and February's figure was 2.5%. Moments before the release, bitcoin was trading in a tight range near $72,000. BTC quickly surged to $72,400 as the data crossed the wires.
Energy costs fuel headline CPI; core surprise lifts risk assets
The acceleration in headline inflation was largely driven by higher energy prices tied to the ongoing conflict in the Middle East. The core miss, however, provided some relief. U.S. equity index futures also edged higher, with the Nasdaq 100 up 0.3%. The 10-year Treasury yield held steady at 4.29%.
Over the past few weeks, markets had pivoted from expecting a series of Fed rate cuts this year to pricing in possible hikes, given the Iran war and surging oil prices. Friday's data did little to shift the Fed's near-term stance: the CME FedWatch Tool showed roughly 99% probability of no change at the late-April FOMC meeting and 97% for the mid-June meeting. Crypto's knee-jerk rally highlights the market's sensitivity to inflation surprises, but the broader macro outlook remains guarded.