CPI Release Approaches, Market Reassesses Fed Rate Hike
The US August CPI is about to be released.
This time, the market's attention to this data is significantly higher than before.
The reason is simple:
It may directly influence whether the Fed maintains interest rates in September or raises them for the first time since 2023.
According to Reuters statistics, the market expects a 0.4% month-on-month increase in the US August CPI, clearly higher than July's 0.1%; year-on-year, it is expected to remain at 3.4%.
For core CPI, a month-on-month increase of 0.2% is expected, while year-on-year may drop from 2.5% to 2.4%.
On the surface, this data does not seem so alarming.
But the real question is:
Will the rise in energy prices begin to transmit to a broader array of goods and services?
This is what the Fed is most concerned about right now.
Overall CPI May Heat Up, But Core Inflation Cools Down
First, let's take a look at the current inflation structure.
In July, the US CPI only increased by 0.1% month-on-month, as gasoline prices fell by 2.9% and the rise in food and drug prices was also moderate, leading to significant suppression of overall inflation.
In August, the situation began to change.
After the escalation of the Iran conflict, oil transportation in the Persian Gulf and Red Sea continued to be affected, causing oil prices to rise again.
WTI crude oil closed at $85.76 per barrel at the end of August, up about 1% from the beginning of the month; at the same time, Brent crude was nearing $100 again.
Wells Fargo expects US gasoline prices to rise month-on-month by over 4% in August, which is likely to directly boost overall CPI.
Therefore, this time the CPI is likely to present an interesting structure:
Overall inflation heats up again, but core inflation may not deteriorate concurrently.
The market expects the core CPI to rise about 0.2% month-on-month in August, and year-on-year could even continue to drop to 2.4%.
This means that current inflation in the US is not completely out of control, but more like influenced by energy price shocks.
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But What the Fed Truly Fears Is "Inflation Spread"
Here lies the dilemma.
If it's just a rise in oil prices, theoretically, it’s seen as a one-time supply shock.
But if energy prices continue to rise and begin to affect transportation, airline tickets, commodities, and even service prices, then the issue becomes very different.
For instance, aviation transportation.
After the rise in energy prices, the cost of aviation fuel will also increase.
Reports indicate that US airplane ticket prices have risen over 2% in July, with Pioneer Navigation expecting a similar increase in August, and Goldman Sachs even predicting that ticket prices might rise by 4%.
In other words:
Rising oil prices → Increased energy costs → Rising transportation costs → Increased prices of goods and services → Core inflation heats up again.
Once this transmission chain forms, the Fed will find it challenging to simply interpret it as a "temporary oil price shock."
This is also the aspect of CPI that truly deserves attention tonight.
AI is Becoming Another Inflation Variable
Besides energy, there's another easily overlooked factor:
AI Investment.
In the past, discussions about AI mostly focused on tech stocks, computing power, and capital expenditures.
But now, the large-scale construction of AI data centers is also starting to affect some commodity prices.
Reports point out that the construction of AI data centers is increasing demand in areas like memory and data storage.
In July, the price of personal computers in the US rose, contributing about a quarter to the 0.2% month-on-month increase in core goods.
If this demand continues to spread, AI investment itself may gradually become a new source of inflation.
This places the Fed in an even more complex situation:
On one hand, housing costs continue to cool, and the overall trend of core inflation remains downward;
On the other hand, rising oil prices and increased demand for AI-related goods could reintroduce price pressures.
Thus, what truly deserves to be observed in the future is not the CPI for a specific month, but whether the downward trend of inflation has been interrupted.
Will the Fed Raise Rates in September?
This is also the most tangled question in the market right now.
As of September 10, CME FedWatch data shows that the probability of the Fed keeping rates unchanged in September is about 39.8%, while the probability of a 25 basis point rate hike has reached 60.2%.
In other words:
The market has now treated "rate hikes" as a very realistic scenario.
And this represents a significant change from previous market expectations.
Previously, discussions revolved around when the Fed would cut rates, but now the focus has shifted to:
Will the Fed raise rates again?
Or even further:
Will it initiate a new tightening cycle?
Some economists have already suggested that if inflation significantly worsens in August, the Fed may not only raise rates in September, but could also continue to raise them in October and December.
Of course, this is not a predetermined outcome in the market.
There are also economists who believe that core inflation remains quite moderate, allowing the Fed to maintain its current stance.
So tonight, the most crucial aspect of the CPI is not simply whether it's “high or low.”
But rather:
Has core inflation truly heated up again?
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If CPI Exceeds Expectations, What Impact Will BTC Face?
For Bitcoin, the significance of this is actually very direct.
Because BTC is essentially still a risk asset that is very sensitive to global liquidity.
If CPI is below expectations, the market may reduce bets on rate hikes, easing pressure on US Treasury yields and the dollar, making the liquidity environment for risk assets relatively friendly.
Conversely, if CPI is significantly above expectations:
Inflation expectations rise → Fed rate hike expectations heat up → US Treasury yields rise → Dollar strengthens → Global liquidity tightens.
This chain will ultimately transmit to BTC.
Especially now that the market has already factored in over a 60% probability of a September rate hike; if the data further reinforces this expectation, Bitcoin may continue to bear pressure in the short term.
Thus, what truly needs attention tonight is not “whether BTC will rise or fall after the CPI release.”
But rather whether the market will further raise its pricing on future rate hikes.
For BTC, the Real Risk Is Not a One-Time High CPI
If this CPI is only elevated due to rising oil prices while core CPI remains mild, then the market need not panic excessively.
Because this means:
The energy shock has not truly spread into the US economy.
But if in the coming months, energy, transportation, commodities, and service prices all rise simultaneously, the market logic will change.
At that point, the Fed will face not just a simple energy shock but the potential for inflation to re-enter a high persistence phase.
For BTC, this represents a far greater risk.
Because what the market truly fears is not a one-time data surprise but the Fed re-entering a sustained tightening cycle.
📌 Web3 X Mr. X: The Real Impact of CPI Data Ultimately Depends on Liquidity Changes
Putting this CPI into the current macro environment, the logic is actually very clear:
Rising oil prices increase overall inflationary pressure;
AI investment brings new commodity price pressures;
If core inflation continues to decline, the Fed still has room to maintain rates unchanged;
But if energy prices begin to spread to core goods and services, rate hike expectations may heat up further.
So after the CPI release tonight, investors need to focus not on a simple number but on three questions:
First, did overall CPI significantly exceed expectations?
Second, did core CPI heat up again?
Third, will market expectations for rate hikes at the Fed's September and future meetings continue to rise?
For BTC, macro data will ultimately reflect on prices through “interest rates and liquidity.”
Thus, how to interpret the short-term market trend cannot rely solely on candlestick charts.
Understanding the relationship between CPI, oil prices, the Fed, and liquidity is key to truly grasping why Bitcoin rises and falls.
—— I am Web3 X Mr. X, with 6 years of growth in Web3, focusing on Bitcoin, the crypto market, macroeconomics, and industry trends. If you wish to continuously track BTC, ETH, HYPE, and the impact of macro data on the market, you can follow the public account "Bitcoin Spring." Understand the hotspots, insight the logic, and establish your own judgments rather than just staring at price fluctuations.
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