Recaps · FOMC · 12 Jun 2024, 19:00 UK

Morning gift, evening bill

12 June 2024 had two US events. The morning CPI report was soft and Bitcoin rose about 3%. The evening Fed decision was less friendly: the median official now expected only one cut that year. Bitcoin gave back the morning's gain and more.

Decision: Wednesday 12 June 2024, 19:00 UK
Rate: Held at 5.25% to 5.50%
Projections: One cut in 2024, down from three in March (Fed)
Same morning: CPI flat on the month, core +0.2%
Bitcoin at decision: $69,800

Two events, one day

At 13:30 UK the May CPI report showed prices flat on the month and core prices up only 0.2%. Bitcoin rose 1.8% in the hour after it. At 19:00 UK the Fed held rates, and its median projection showed one quarter-point cut in 2024, down from three in March (Fed, Reuters).

A slide through the press conference

1 19:30 UK: press conference starts
2 20:50 UK: low, about 3.7% down

Bitcoin, 5-minute candles, % from the 19:00 UK decision price. Source: Bitstamp.

Bitcoin fell -0.80% on the statement and kept falling. It was -1.39% after an hour, #18 of 80 Fed decisions at 3.2 times a normal hour, and reached its low, about 3.7% down, at 20:50 UK. Stocks hardly moved: the S&P 500 ETF was -0.00% at the hour.

Change two hours after the decision, in %.

What the pair teaches

When two events land on the same day, the later one gets the final word. The CPI report made a September cut look more likely; the dots pushed back on that within hours. Bitcoin had risen on the first piece of news and had the most to give back on the second. Stocks, which had already priced in less from the morning, barely moved in the evening.

It is also a lesson about projections. The Fed's one-cut median turned out to be too cautious: in September it cut by half a point. Bitcoin was -4.2% a day after this decision and -6.8% after a week, with Solana -14%.

The next meeting, on 31 July, followed a similar pattern. The Fed held again, Bitcoin was only 0.2% lower after an hour, and then it fell to 2.5% down at four hours. In both cases the first reaction was mild and the selling built through the evening. For anyone watching a Fed day, the first five minutes were a poor guide to the next four hours. The Fed's own projections are a guide to its thinking at the time, not a forecast to trade on months ahead.

Sources: release time and figures from the Federal Reserve's statement and target range (FRED DFEDTARU). Crypto: Bitstamp 5-minute candles; SPY/QQQ: IEX. No consensus forecasts are shown because they are proprietary; comparisons are with the previous release. “× normal hour” compares the first-hour move with the median move in matched quiet hours. How we measure it.