Inflation Still High: The August CPI Release and the Plunge in Nasdaq and Bitcoin
2 min read · · Korean original
The US CPI for August 2022 came in above expectations, sending the Nasdaq and Bitcoin sharply lower. The Nasdaq fell about 5% overnight, and Bitcoin dropped close to 10%.
As I write this, Bitcoin is barely holding on to $20,000. With many major events, including the FOMC, scheduled for September, it looks like we're in for a lot of volatility.
The stock market, which plunged after the recent Jackson Hole speech, seemed to be rebounding after the 6th. But this CPI print came in above expectations despite falling oil prices, confirming that inflation still hasn't really turned the corner, and markets dropped sharply.
On top of that, core CPI, which excludes the volatile energy and food categories, came in at 0.6%, well above the expected 0.3%. As a result, a 75bp hike at the FOMC is now treated as a given, and there's even talk of a 100bp hike.
Expectations of these steep rate hikes sent US Treasury yields soaring. The 2-year yield broke above 3.75%, its highest level this year, and the 10-year, the benchmark for market rates, rose to 3.4%.
Nasdaq tech stocks were hit hard too. Nvidia and Meta plunged nearly 10%, and Apple and Alphabet fell about 6%.
The dollar exchange rate also rose and is now closing in on the KRW 1,400 mark. Inflation hasn't been tamed yet. It looks like the correction in financial and real assets may only be getting started.
I expect this crisis to last at least a year, so I plan to start buying in installments over a fairly long time frame. In my last post, I wrote that FOMO would kick in, but I held out well. It looks like we'll get a bit more opportunity.
