US September PPI YoY 6.3% (expected 5.3%), MoM 1.3% (expected 0.5%) – both way above expectations. Three data points dropped tonight, all pointing in the same direction: - PPI YoY: 6.3% (expected 5.3%), highest since May - PPI MoM: 1.3% (expected 0.5%), more than double the expected increase in just one month - Retail Sales MoM: 0.8%, higher than expected - Initial Jobless Claims: 199k (expected 200k), still very few people unemployed PPI reflects the prices factories charge businesses. In a few months, this will show up on supermarket shelves as CPI. Yesterday’s CPI already exceeded expectations, and now today’s PPI is way above as well. Inflation in the coming months is very likely to remain high. Connecting the dots: - Factories are raising prices - Consumers are still spending - Unemployment remains low - The economy hasn’t cooled down, and inflation isn’t easing This puts the Fed in a tough spot. Forget about rate cuts. The calls for rate hikes will only grow louder. The next key date is the October 28 FOMC meeting. What does this mean for crypto? High interest rates = strong USD = money flows to safer assets. The riskiest assets are the first to get hit. Altcoins will drop harder than $BTC, and contract volatility will spike. The real reaction tonight will depend on the US stock market opening at 9:30 PM. If the market doesn’t drop much at the open, it means this was already priced in. If it tanks at the open, be cautious for the rest of the week.