Why the Stock and Crypto Markets Bloomed After US Inflation Data: A Comedic Revelation

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On the splendid Tuesday of July the 5th, as the sun shone with the false modesty of a diamond on a crown, our beloved stock and crypto markets, like a haughty lord at a garden party, decided to drift upwards following the ever-so-charming publication of the U.S. inflation data—mixed, of course, like a rather unfortunate cocktail.

Futures tethered to the esteemed Nasdaq 100 and the S&P 500 ascended like poetic musings, with 160 and 30 points, respectively. And there was Bitcoin (BTC), once again resurrected like a phoenix over its initial losses, reaching the heavenly heights above $118,000. Meanwhile, other altcoins, such as Ethereum (ETH) and Cardano (ADA), shook off the dust of despair and twinkled back into the brief limelight of prosperity. 🌟

The so-called rise was ignited by the Bureau of Labor Statistics, which delivered a report that was as delightful as it was perplexing. Core inflation, that fickle mistress who shuns the caprice of food and energy prices, missed the analysts’ forecasts for the fifth consecutive month, much to the chagrin of the moneyed elite.

Core CPI, that sneaky little rascal, nudged itself up from a mere 0.1% in May to a scintillating 0.2% in June, falling short of the dazzling 0.3% forecast. The annualized figure, not to be outdone, crept from 2.8% to 2.9%, like a gentleman at a ball hesitant to approach the dance floor, also below the anticipated rise to the grandiose 3%.

Our report further disclosed the headline consumer inflation—a spectacle to behold!—rising from 2.4% to 2.7% annually and from the infantile 0.1% to a bold 0.3% month-on-month. This annual gala was precisely in line with the expectations of the wise sages polling at Reuters.

The response from stocks and crypto was akin to a jubilant chorus, whilst bond yields fell away like the last guests at a party where the punch has run dry. The data whimsically hinted at a possible interest rate cut at the Federal Reserve’s upcoming meeting in September, providing a delightful echo of the Fed’s illustrious 2% target.

— Mohamed A. El-Erian (@elerianm) July 15, 2025

The Federal Reserve, ever the enigmatic deity, continues to declare that they shall be data-dependent—the gods only know what that means! They are convinced that the whims of President Donald Trump’s tariffs shall gently nudge inflation upward, pushing it ever further from that elusive 2% bullseye.

The Future of the Crypto Circus 🎪

As we peer into the crystal ball of the cryptocurrency market, it appears we are destined for a delightful long-term performance, as analysts portentously predict that the Federal Reserve may indulge in interest rate cuts before the year wraps its arms around us.

Odds of a rate cut now dance at a sprightly 82% on Polymarket, with most wagerers anticipating two such festivities this year. Financial wizards from institutions like Goldman Sachs anticipate three delightful cuts this year, while Morgan Stanley, ever the overachiever, expects a shocking seven cuts by 2026. 🎉

Ah, the captivating dance of cryptocurrencies and other risk assets! They flourish when the Fed decides to loosen its purse strings, as seen in the chaotic waltz during the COVID-19 pandemic and amidst the 2024 escapades. The Fed, like a generous benefactor, slashed rates to a thrilling zero during the pandemic, only to make two cuts last year, much to the delight of risk-takers everywhere.

And, of course, our exuberant rally is also supported by the irresistible dynamics of supply and demand. Bitcoin and Ethereum ETF inflows, along with corporate treasury cravings, have surged, while the token supply on exchanges dwindles like the last morsel of cake at a lavish banquet. 🍰

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2025-07-15 16:43