CPI data just dropped and it’s giving mixed signals. Month-on-month CPI came in at 0.3%, exactly what the market expected but it’s still higher than last month’s 0.1%, so price pressure is climbing a bit. Year-on-year CPI is a little hot too at 2.7% vs 2.6% forecast, showing that inflation isn’t fully cooling off yet.

Now here’s the interesting part Core CPI came in soft at 0.2% (forecast was 0.3%). That’s a solid positive. It shows long-term inflation pressure is calming down, which supports the idea of rate cuts.

But this also puts the Fed in a tough spot. Core is soft = dovish case builds ✅. Headline is sticky = hawkish argument still alive ❌. So Powell might hold back a bit on flipping the stance just yet.

Markets will probably stay neutral to slightly bullish in the short term because of the soft core print. But if the next PCE data also comes in hot, expect the Fed to stay cautious no green light for aggressive risk just yet.

Risk assets like crypto and stocks might chop around for now. But if the Fed drops even a hint of rate cuts in their forward guidance, that could flip the switch and trigger a full-on rally. But if they dont then vice versa

Stay alert. Things are getting interesting.