U.S. Inflation Eases to 3.4% as Bitcoin Holds Around $64K

Both headline and core inflation came in exactly as economists had predicted, while bitcoin remained close to $64,000 and U.S. Treasury yields moved lower.

U.S. consumer inflation matched forecasts in July, leaving market expectations for a potential Federal Reserve rate hike largely intact.

The Consumer Price Index increased 0.1% in July from June, matching economists’ estimates and reversing part of June’s 0.4% monthly decline.

On an annual basis, headline CPI climbed 3.4%, meeting expectations but easing slightly from June’s 3.5% rate.

Core CPI, which strips out food and energy costs, advanced 0.2% month over month in July, matching forecasts and June’s pace. Year over year, core inflation rose 2.5%, in line with analyst expectations and down from 2.6% in June.

Bitcoin briefly slipped from $64,400 to about $64,080 immediately after the data was released before stabilizing. The cryptocurrency remained little changed over the previous 24 hours. Nasdaq 100 futures were up 0.7%.

Treasury yields continued to decline after weakening ahead of the CPI release. The two-year yield was around 4.19%, down 3.6 basis points for the day, while the 10-year yield stood at 4.66%, roughly three basis points lower.

The July inflation report was already closely watched by investors, but its importance increased following a weaker-than-expected U.S. jobs report that showed the economy lost 23,000 jobs in July.

Traders now see a 44% probability of a Federal Reserve rate hike at its September meeting, according to the CME FedWatch Tool, down from 48% before the CPI data. A week earlier, markets had assigned a 54% chance to a September increase.