U.S. January Consumer Price Index data came in slightly below expectations, with core CPI at 2.5% year-on-year, the lowest reading since early 2021. The print initially lifted stock and cryptocurrency markets on Friday, but crypto gains faded over the weekend.
January CPI: Core Inflation at 2.5%
Government figures showed headline CPI stood at 2.38% YoY and core CPI at 2.5%, both marginally softer than consensus. Bitcoin and major altcoins briefly rallied on the data but failed to hold onto those levels as the weekend progressed.
Busy Macro Calendar Ahead
U.S. markets are closed Monday for Presidents' Day. Tuesday brings the ADP employment update and January retail sales. Wednesday features December durable goods orders (delayed), the Federal Reserve's meeting minutes from its last policy meeting, and 10 central bank speaker events. Later this week, the December Personal Consumption Expenditures (PCE) inflation report—the Fed's preferred gauge—is due.
Goldman Sachs raised its PCE forecast after the January CPI, estimating core PCE rose 0.40% month-on-month in January. The economists cited rising consumer electronics and IT prices, which have a heavier weighting in PCE than in CPI, as well as a global shortage of RAM and storage components driven by AI data center demand, which has lifted computer and component prices.
Rate-Cut Odds: 90% for Hold in March
The CME Fed Watch Tool now prices a 90% probability that the Fed will keep rates unchanged at its March meeting. Expectations for rate cuts continue to be pushed back.
In crypto markets, total capitalization fell over the past 24 hours. Bitcoin retreated from recent highs during early Asian trading Monday and has stayed rangebound for the past ten days. Ethereum prices dropped sharply, and altcoins extended their slide. Macro commentary firm The Kobeissi Letter noted that geopolitical tensions and macro uncertainty remain elevated, warning that volatility could persist this week.