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CPI React: Stocks surge on cool inflation report, bitcoin nears $18k

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US stocks embraced a very cool inflation report that supports the idea that the Fed could be done with hiking rates after the February FOMC meeting. ​ The Fed might not have to take rates to 5.00% or higher and that is surprising news for stock traders. ​ Fed tightening is looking like it will just need a half-point increase tomorrow and a 25bp increase in February. ​

The November inflation report showed inflation continues to ease. Core CPI had the smallest monthly increase in over a year, while food and energy prices cool quickly. ​ The big question remains wages and if the labor market will not weaken quickly enough. ​ If job gains soften towards the 50,000 level, that might be enough to get wage pressures under control. ​

CPI rose 7.1% in November compared to a year ago, which was lower than the 7.3% consensus estimate. ​ Core CPI improved from 6.3% to 6.0%, a tick better than forecasts. ​ On a monthly basis, CPI eased from 0.4% to 0.1%. ​ Inflation slowed across the board with the exception of the CPI core index. ​

Crypto

To the amazement of many crypto watchers, Bitcoin continues to hold the $17,000 region. ​ Today, the focus was going to be on the House Panel probe on the FTX collapse, with Sam Bankman-Fried’s testimony. ​ Traders woke up to news that Sam Bankman-Fried was arrested in the Bahamas after U.S. files criminal charges.

SBF is expected to be extradited to the US. The founder collapsed crypto exchange FTX is being charged with defrauding customers of $1.8 billion, concealing the relationship of FTX and Alameda Research and of using commingled customer funds. ​

Bitcoin extended its rally after a key pricing report showed the disinflation trend continues. ​ Treasury yields tumbled alongside the dollar, which is great news for cryptos. ​ Bitcoin is getting close to the $18,000 level and that rally could continue if risk appetite remains strong post-Fed.

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Ed Moya

Ed Moya

Contributing Author at OANDA
With more than 20 years’ trading experience, Ed Moya was a Senior Market Analyst with OANDA for the Americas from November 2018 to November 2023. His particular expertise lies across a wide range of asset classes including FX, commodities, fixed income, stocks and cryptocurrencies. Over the course of his career, Ed has worked with some of the leading forex brokerages, research teams and news departments on Wall Street including Global Forex Trading, FX Solutions and Trading Advantage. Prior to OANDA he worked with TradeTheNews.com, where he provided market analysis on economic data and corporate news. Based in New York, Ed is a regular guest on several major financial television networks including CNBC, Bloomberg TV, Yahoo! Finance Live, Fox Business, cheddar news, and CoinDesk TV. His views are trusted by the world’s most respected global newswires including Reuters, Bloomberg and the Associated Press, and he is regularly quoted in leading publications such as MSN, MarketWatch, Forbes, Seeking Alpha, The New York Times and The Wall Street Journal. Ed holds a BA in Economics from Rutgers University.
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