Recaps · US CPI · 14 Sep 2021, 13:30 UK
The first sign of a peak
After months of hot readings, the August 2021 report was the first that looked like inflation might be peaking. Core prices barely rose. Bitcoin rallied and held most of the gain. US stocks rallied too, then reversed and closed lower.
- Release
- Tuesday 14 September 2021, 13:30 UK
- CPI
- +0.3% m/m, 5.3% y/y (BLS)
- Core CPI
- +0.1% m/m, smallest since February; 4.0% y/y
- Forecast
- Core 4.2% y/y (Yahoo Finance)
- Bitcoin at release
- $45,805
The numbers
Core prices rose 0.1%, below the 0.3% expected, and 4.0% over the year, below the 4.2% forecast (BLS, Reuters, Yahoo Finance). Reuters linked the slowdown to a 1.5% fall in used car prices, which had driven much of the earlier surge. The report supported Powell's view that the spike was temporary, and Treasury yields fell.
Bitcoin up, stocks down
- 1 13:35 UK: Bitcoin about +1.1%
- 2 16:15 UK: Bitcoin's high, about +2.5%
Bitcoin rose +1.09% in five minutes and was +1.80% at the hour, #15 of 117 CPI reports at 3.9 times a normal hour. It reached about 2.5% up at 16:15 UK. The S&P 500 ETF was -0.73% at four hours. Reuters reported that stocks gave up their early gains on worries about the recovery and a likely corporate tax rise; the S&P 500 closed 0.57% lower (Yahoo Finance).
| Market | 5m | 1h | 4h | 24h | 1w | × normal hour |
|---|---|---|---|---|---|---|
| Bitcoin | +1.09% | +1.80% | +2.00% | +3.99% | −5.45% | 3.9× |
| Ethereum | +1.27% | +1.66% | +2.57% | +4.26% | −7.42% | 2.8× |
| S&P 500 ETF (SPY) | −0.10% | −0.56% | −0.73% | – | – | – |
Change from the 13:30 UK release.
Why the split
For stocks, the inflation news was soon outweighed by tax and growth worries, which hit equities more than crypto. Bitcoin had a different story that month: it had dropped sharply on 7 September, the day El Salvador's Bitcoin law took effect, and a soft report gave it room to recover. Bitcoin was +4.0% a day later.
The gain did not last. Bitcoin was -5.5% a week after the release. And the "peak" was false: by the October report in November, inflation hit 6.2%, a 30-year high. One soft month is a weak signal when the trend is still rising.
A month earlier the July report also came in slightly soft, and Bitcoin rose about 1.0% in its first hour. In September the first hour was nearly twice that, at 3.9 times normal. A second soft reading in a row carried more weight than the first, which is a useful pattern to watch: markets react more when a surprise confirms a turn than when it hints at one.
Sources: release time and figures from the U.S. Bureau of Labor Statistics (public domain), first-print values via ALFRED, Federal Reserve Bank of St. Louis. 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.