The U.S. Bureau of Labor Statistics released July inflation data showing a mixed economic picture. Headline Consumer Price Index (CPI) rose 0.2% month-over-month, down from June's 0.3% increase and matching forecasts. Annually, headline inflation held steady at 2.7%, slightly below the 2.8% consensus expectation.
Core CPI, excluding food and energy, climbed 0.3% monthly and accelerated to 3.1% year-over-year – a five-month high that exceeded both the 3.0% forecast and June's 2.9% reading. This places core inflation firmly above the Federal Reserve's 2% target.
Immediately following the 1:30 PM ET release, cryptocurrency markets rallied. Bitcoin gained 0.5% to $119,000, reclaiming momentum near the $120,000 psychological threshold. Ethereum outperformed significantly, surging over 5% to $4,400 as traders reacted to the combination of cooling headline inflation and persistent core pressures.
Market expectations for a September Fed rate cut increased from 84% to 90% according to CME FedWatch data. Traditional markets echoed the positive sentiment, with Nasdaq 100 and S&P 500 futures rising approximately 0.6%, while the U.S. dollar softened and 10-year Treasury yields dipped to 4.26%.
The reaction followed typical high-impact data patterns: liquidity concentrated near the release window, order books thinned pre-announcement, and flows heavily favored major cryptocurrencies. Analysts noted the data maintains pressure for cautious monetary policy, with headline figures supporting risk appetite while core metrics underscore ongoing inflation concerns in services categories.