Replays · US CPI · 15 May 2024, 13:30 UK

After three hot months, a number markets could live with

The first months of 2024 had been a disappointment for anyone hoping for rate cuts. Inflation had stopped falling. So when April's figures came in slightly softer, the relief showed up immediately: Bitcoin's first five-minute candle added 1.7%, and the gains kept building for the rest of the day.

Monthly change in core CPI, first prints (ALFRED), by reference month. April's figure was published on this day.

Small numbers, big relief

Core prices rose 0.3% in April after three straight months at 0.4%. Headline prices also rose 0.3%, and the annual rate edged down from 3.5% to 3.4%. None of that was dramatic. But by May the Fed had pushed back expected cuts, and traders were looking for evidence that the stall was temporary. This was the first piece.

A move that built through the day

1 13:30 UK: the April CPI report
2 14:30 UK: US stocks open
3 16:30 UK: a second push higher, Bitcoin up about 3.6%

Bitcoin, five-minute candles, 30 minutes before to 4 hours after the release. % from the 13:30 UK price of $62,689. Source: Bitstamp.

Unlike many big CPI reactions, this one didn't fade. Bitcoin jumped on the first candle, held the gain for an hour, rose again as US stocks opened, and pushed higher once more in the late afternoon. It finished the first hour +2.6% (5.6× a normal hour, #10 of 117) and the four-hour window +3.5%. A day later it was trading near $66,400, 5.9% higher.

Solana led the market with a 4.6% first hour. US stocks were much calmer, with the S&P 500 ETF up just 0.1% in its first hour, although both main indexes closed at record highs that day.

The pound also gained, with sterling +0.6% against the dollar at the fix. A softer US number tends to weigh on the dollar, and this one did, though only modestly.

The week, and an ETF surprise

Change over the week after the release.

The one-week column has a second story in it. On 20 May, Bloomberg's ETF analysts raised their odds of the SEC approving spot Ether ETFs from 25% to 75%, a prospect most of the market had written off. Ether jumped, and by the end of the week it was 28% above its price at the CPI release. That move had nothing to do with inflation, but it is a reminder that a one-week window measures everything that happens in the week, not just the release.

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.