The CPI data at 8:30 tonight is definitely the focal point of the market! But don't rush to just look at whether the numbers go up or down; the situation is a bit deeper this time—the 'credibility' of the data itself has become a significant issue.
The 'accountant' behind this, the U.S. Bureau of Labor Statistics, has been having a tough time lately. Their budget has been severely cut, and they are short-staffed, forcing them to change their old methods of data collection. What used to be done through phone calls and in-person visits now often relies on 'guessing' (professionally known as 'imputation'). It's like trying to buy a piece of clothing without trying it on; you can only look at a rough picture and guess the size, which carries a high risk of error!
Those savvy analysts on Wall Street (like Morgan Stanley's Gapen and experts from Bank of America) are now feeling quite uneasy:
1. The BLS is reportedly using 'imputation' for as much as 25%! While most of the time, borrowing data from nearby regions is relatively reliable, if they are forced to borrow data from too far away or irrelevant places, the error can increase.
2. Experts estimate that these 'imputations' may cause a deviation of about 0.01%-0.02% in the overall inflation data. Normally, such a small error can be ignored, but right now, the Federal Reserve is watching every decimal point closely to decide whether to cut rates! Every 'basis point' (0.01%) affects billions of dollars.
3. While the new methods may not intentionally mislead, they could cause the data to fluctuate like a roller coaster, making interpretation more challenging.
The Federal Reserve is now like walking a tightrope, relying entirely on these inflation data to guide them on when and how much to cut rates. If the data becomes 'distorted,' their judgment could go awry.
If the data this week suggests that inflation remains stubborn (especially for goods affected by tariffs), even if the job market cools a bit, the Federal Reserve may hesitate to cut interest rates in September, choosing to wait and see. This runs counter to the expectations of many traders betting on a rate cut in September!
Traders are now divided into '25 basis point cut faction' and '50 basis point cut faction'; everything depends on the 'mood' of this week's data and the market's 'trust level.'
The Federal Reserve's interest rate policy directly affects the 'tightness' of the financial market's 'faucet,' and cryptocurrency is the most sensitive to this!
The inherent suspiciousness of the data + the Federal Reserve possibly being indecisive as a result = skyrocketing market anxiety! Under this anxiety, the price volatility of mainstream cryptocurrencies like Bitcoin and Ethereum is likely to intensify. Both good and bad news may be exaggerated, and market sentiment will be like a roller coaster.
Especially for Bitcoin, the recent rebound has largely bet on the Federal Reserve's imminent rate cut (making money 'cheap,' potentially leading to more funds flowing into high-risk assets). If this week's inflation data (even if 'inflated') shows inflation is sticky and extinguishes hopes for a rate cut in September, the crypto market may face short-term pressure and correction, causing those expecting 'easing' to temporarily withdraw.
If the credibility of traditional economic data continues to be questioned, even raising doubts about the entire official financial system, Bitcoin, as a 'decentralized,' 'censorship-resistant,' and 'limited supply' alternative asset, may once again be valued by some investors for its 'digital gold' safe-haven attributes. In the long run, this may not be a bad thing for the crypto ecosystem.
In an environment of increasing uncertainty and high volatility in mainstream cryptocurrencies, altcoins with relatively poor liquidity may see even more drastic price fluctuations, increasing risk. We need to be more cautious and not let short-term noise cloud our judgment. In this fog of data, risk management is more important than ever! Buckle up; the market may be a bit bumpy this week.
