Key Takeaways
August CPI rose 0.4%, above forecasts of 0.3%, while core CPI stayed in line at 0.3%.
Jobless claims surged to 263K, pointing to further weakness in the labor market.
Bitcoin dipped 0.5% to $113,700, while Treasury yields fell and gold gained.
Markets still expect the Fed to cut rates by 25 bps next week, ruling out a 50 bps move.
August CPI Comes in Hot
U.S. inflation data released Thursday showed that the Consumer Price Index (CPI) rose 0.4% in August, faster than the 0.3% consensus and July’s 0.2%. Year-over-year, CPI climbed 2.9%, matching forecasts but higher than July’s 2.7%.
Core CPI, which strips out food and energy, increased 0.3% month-over-month and 3.1% year-over-year, both in line with expectations.
The hotter headline reading underscores the Fed’s challenge of cooling inflation without derailing the economy.
Markets React: Bitcoin, Gold, Treasuries Move
Markets showed a mixed reaction to the data release:
Bitcoin (BTC) fell 0.5% from $114,300 to $113,700.
U.S. stock futures gave up earlier gains, now up just 0.1%.
Treasury yields dropped five basis points to 4.00%.
Gold erased earlier losses, climbing 0.15% to $3,675 per ounce.
The U.S. dollar strengthened modestly.
The reaction suggests traders are weighing hotter inflation against signs of a weakening economy.
Jobless Claims Surge to 263K
At the same time, the weekly Initial Jobless Claims report showed a sharp increase to 263,000, well above the 235,000 forecast and last week’s 236,000.
The spike highlights continued deterioration in the U.S. labor market, amplifying pressure on the Fed to ease policy despite sticky inflation.
Fed’s Next Move: 25 bps Cut Expected
According to the CME FedWatch tool, traders now see:
92% chance of a 25 basis point rate cut at the September 17 meeting.
8% chance of a 50 basis point cut, down from higher odds earlier in the week.
The combination of hotter CPI and weak job data leaves the Fed walking a tightrope between inflation control and economic support.
