Good Inflation News: Bitcoin Reacts like a Joyful Kangaroo

U.S. CPI Remains Flat in October, Surprising Analysts; Bitcoin Gains Almost 1%

US CPI flat in Oct; Bitcoin up nearly 1%.

Well, well, well, what do we have here? The much-awaited U.S. inflation data for October is finally out, and it’s a pleasant surprise! The headline Consumer Price Index (CPI) remained unchanged for the month, defying the expectations of those economists who predicted a rise of 0.1%. It’s like inflation took a break and decided to give us all a breather.

You know what’s even more impressive? The core rate, which excludes food and energy costs, rose by a mere 0.2% instead of the expected 0.3%. It seems like the core CPI is playing hard to get, teasing those analysts who thought it would rise at a faster pace. Talk about keeping investors on their toes!

But wait, let’s dive even deeper into the numbers. The CPI for October not only stayed flat as a pancake, but it also thwarted economists’ predictions of a 0.1% rise. And if that’s not enough to make you do a double-take, September’s gain of 0.4% seems like ancient history now. It’s like inflation hit the snooze button and decided to lounge around for a bit longer.

On a year-over-year basis, CPI managed to keep its cool, jumping just a hair above expectations at 3.2% instead of 3.3%. September’s 3.7% surge can now take a chill pill, knowing it’s not alone in the above-expectations club.

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As for our beloved core CPI, it behaved like a mischievous teenager, rising only 0.2% against all odds. That’s below the anticipated 0.3% increase and September’s 0.3% hike. But hey, it’s still managed to sprout wings and fly higher than expected, clocking in at 4.0% on a year-over-year basis. It’s like it whispers in our ear, “I may strip out food and energy costs, but I can still make heads turn!”

Enough about boring numbers, let’s talk about the exciting stuff. Just moments after the news broke, our beloved Bitcoin did a little happy dance, knee-jerking almost 1% higher to just shy of $36,700. Who knew our favorite digital asset could be so responsive to inflation data? It’s like Bitcoin is our trusty sidekick, always ready to react like a joyful kangaroo to any market news.

Now, let’s address the elephant in the room – the U.S. Federal Reserve’s 2% target. While headline CPI inflation has been receding lately, it has stubbornly remained above that coveted mark. The core rate seems determined to outshine its headline counterpart, staying firmly above 4% for a good chunk of time. The Fed has been dropping hints here and there, suggesting that they may consider one more rate hike before wrapping up their 20-month-long monetary tightening cycle. It’s like they’re playing a game of “just one more round” with the markets.

But don’t worry, fellow investors, there’s reason to celebrate. Joseph Brusuelas, chief economist at RSM, took to Twitter to share his enthusiasm. He wrote, “This is good news folks,” while pointing out that core goods prices actually declined by 0.2% in October. He even predicts more disinflation coming our way, especially when shelter costs decide to take a vacation until mid-2024. It’s like a sense of relief washes over us, knowing that even in the face of inflation, some prices can still take a break.

And here’s something to keep in mind for your future trading strategies. Prior to this exciting update, traders were betting on an 86% chance that the Fed would keep rates steady at its next meeting in mid-December. But guess what? Those odds skyrocketed to 99.5% after the data popped up, and there’s a delightful 95.6% chance of a continued pause at the January meeting. It’s like the market is taking a collective deep breath and preparing for a serene pause alongside the Fed.

Now, let’s not forget about our traditional markets. They’re soaring higher than a kite after this remarkable inflation news! Nasdaq 100 futures are up by a whopping 1.9%, and S&P 500 futures are dancing happily with a 1.4% gain. It’s like the markets have put on their party hats and decided to celebrate the good times.

Oh, and let’s not overlook the 10-year Treasury yield, which has taken a dramatic 16 basis points dip down to 4.476%. It’s like the bond market is saying, “Who needs high yields when there’s good inflation news?”

So, dear fellow investors, as we bask in the glow of this refreshing inflation data, let’s take a moment to appreciate the resilience of Bitcoin, the teasing nature of core CPI, and the quirky predictions of economist Joseph Brusuelas. Remember, the market is filled with surprises, and it’s up to us to ride the waves with a twinkle in our eye and a smile on our faces.

Now, tell me, how do you plan to navigate these exciting times? Let’s embrace this journey together and keep the laughter flowing!

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