Bitcoin, stocks, and gold saw sharp volatility on Friday after the final major U.S. inflation report before the Federal Reserve’s September 15-16 FOMC meeting, with data showing 162,000 August jobs added, producer inflation at 5.4%, consumer inflation at 3.4%, and oil above $100 per barrel. Rate-hike expectations rose to as high as 87%, according to Reuters, while BTC initially fell from $77,000 to $76,000, spiked near $80,000, and retreated; analysts at The Kobeissi Letter said the combination leans hawkish, leaving the Fed meeting’s tone as the key focus.
Bitcoin, stocks, and gold underwent intense volatility on Friday after the release of the latest U.S. CPI report. The data completed the major economic picture before the Federal Reserve‘s September 15-16 FOMC meeting, showing strong employment, sticky inflation, and oil prices above $100 per barrel.
According to analysts at The Kobeissi Letter, the U.S. central bank now has all relevant data, and the combination leans hawkish. The August jobs report showed the economy added 162,000 jobs, nearly triple expectations, while producer inflation rose to 5.4% from 4.8% in July and components feeding into the Fed’s preferred PCE gauge also strengthened.
Consumer inflation remains well above the Fed’s 2% target, and record diesel prices added concerns about broader energy and transportation costs. The analysts wrote, “There you have it folks. We now have all the relevant data that we will get prior to the September 16th Fed meeting. US PPI inflation is up to +5.4%, the US economy tripped expectations and added +162,000 jobs in August, and US CPI inflation is at +3.4%. We also have $100+ oil…”
BTC’s initial reaction was telling. It dropped from $77,000 to $76,000, spiked to almost $80,000, and then slipped back near its starting point.
The probability of a 25-basis-point rate hike jumped to 79% after the CPI release, and Reuters later reported futures pricing at 87%, up from 72% before the data. Higher rates typically support Treasury yields and the dollar while tightening financial conditions and reducing demand for risk assets like BTC.
However, the subsequent recovery could suggest investors have already priced in much of the anticipated hikes. The September 16 meeting becomes less about whether the Fed raises rates, which is widely expected, and more about how hawkish Kevin Warsh and other policymakers sound afterward and whether markets believe additional hikes are coming.
