Whenever the U.S. Department of Labor releases CPI data, the nerves of global investors instantly tighten. This economic indicator reflecting inflation levels acts like an invisible scalpel, precisely dissecting the price trends of various assets.
When inflation is high, the market often reacts sharply. CPI data that exceeds expectations reinforces the Federal Reserve's interest rate hike expectations, causing U.S. stocks to fall, with the Nasdaq index, primarily composed of tech stocks, being particularly sensitive. The cryptocurrency market also experiences severe fluctuations, with Bitcoin potentially crashing over 5% in a short period, and mainstream coins generally following suit. Traditional safe-haven assets like gold also struggle to escape the pressure of a strengthening dollar.
When inflation cools, the market feels like a long-awaited rain after a drought. CPI data that comes in below expectations ignites rate cut expectations, leading to a collective celebration among risk assets. U.S. stocks rebound strongly, the cryptocurrency market sees a widespread rally, and altcoins often show greater resilience. Gold's safe-haven attributes regain favor, while Treasury yields respond by falling.
For investors, the release of CPI data is both a risk and an opportunity. A savvy investor's guide includes: reducing leverage to avoid risk before the data release; patiently waiting for rebound opportunities after panic selling when inflation exceeds expectations; decisively following strong assets when inflation is below expectations. It is worth noting that the impact of a single data point may be short-lived, and real trend reversals require verification from continuous data.
Historical experience shows that when the CPI plummeted to 3% in June 2023, Bitcoin surged 7% on that day; while the CPI rebound in January 2024 led to a 2.3% drop in the Nasdaq in a single day, with Bitcoin following down by 5%. These cases vividly illustrate the market influence of CPI data.
In this liquidity-driven market, CPI data acts like a beacon, illuminating inflation trends and guiding the flow of funds. For investors, rather than scrambling at the time of the data release, it is better to position themselves in advance to seize opportunities amid market fluctuations. Remember, in front of the CPI 'heartbeat accelerator', staying calm is more important than chasing volatility.