Core CPI Surge Hits Bitcoin and Gold as Federal Reserve Rate Hike Odds Spurt
A hot 0.3% monthly core CPI reading beat all Wall Street forecasts, triggering a swift flash drop in Bitcoin and gold. Higher Treasury yields are suppressing zero-yield assets as interest rate futures reprice toward Federal Reserve tightening. The fast market recovery signals positioning liquidations rather than sustained spot selling ahead of Wednesday's Fed decision.
Headline inflation met expectations at 3.4% year-over-year, but the monthly core metric surprised to the upside at 0.29%. That figure beat every single Wall Street forecast and annualizes to roughly 3.5%, delivering a sudden macro jolt to risk assets.
Bitcoin briefly plunged from $77,100 down to $76,050 while spot gold dropped over sixty dollars before both assets reclaimed most of their losses inside minutes. The shared pullback highlights how elevated Treasury yields continue to pressure non-yielding holdings across macro regimes.
With ten-year yields hovering near 4.95%, bond markets are actively pricing in higher borrowing costs. The Federal Reserve meets next week, and derivatives markets now lean heavily toward a rate hike rather than the previously anticipated pause or cut.
The rapid price recovery suggests the initial sell-off was driven by derivative leverage flushes rather than spot distribution. Traders should watch Wednesday's FOMC rate decision and upcoming PCE data to confirm whether this monthly core uptick forces a prolonged monetary squeeze.