The fake news rattled financial markets with a hoax release of Consumer Price Index data scheduled for early on July 12th. It flooded markets with sellers because the year-over-year increase was 10.2%. A tightening of regulations by the Federal Reserve is therefore likely in light of this development. Everyone calmed down after the Bureau of Economic Statistics said it was a hoax.
A bogus image of the CPI release is currently making the rounds on Twitter. It’s a rip-off. Watch for tomorrow’s official CPI release at 8:30 a.m. ET.
— BLS-Labor Statistics (@BLS_gov) July 12, 2022
The real CPI report: What’s in store for us?
To summarise, there were no significant alterations to the final report that was made public on July 13th. Consumer prices rose by 9.1 percent, the highest rate of inflation in 41 years, although producer prices are rising at a much faster rate. Everyone heard utter disbelief around the country. But, nowhere more so than in the Oval Office, where inflation is wreaking havoc on a presidency.
Dipping effects on the Stock Market
For the rest of the trading day, the blue-chip S&P 500 index, which had been fluctuating between small gains and losses throughout the day, entered negative territory around 2pm ET. As of the close, the S&P 500 had retraced some of that loss, ending the day down 0.9 percent. The Nasdaq Composite, which is heavily weighted toward technology, ended the day down 0.9%, following suit with the S&P.
Effects on Digital Currency
The price of cryptocurrency plummeted because of the widespread dissemination of fictitious CPI data. Bitcoin (BTC) dropped as low as $19,302 in the early afternoon. It’s currently trading at $19,488 after a slight rebound. The price of Ethereum (ETH) fell by as much as 7% to $1,038. In the current market, it is trading at $1,056 Other cryptocurrencies have also taken a significant hit.
The Consumer Price Index (CPI) is a powerful indicator of inflation and the Federal Reserve’s monetary policies. A worsening CPI report prompts the Fed to raise interest rates and implement quantitative easing policies.
In response to rising inflation, the Fed recently increased interest rates by 0.75 percentage points. The price of cryptocurrencies plummeted because of the move. It was the worst quarter for Bitcoin in a decade.
Investors thought and worry on CPI report
Until they released the CPI data, investors and traders in the crypto industry are hesitant to be bullish on crypto. In the opinion of a prominent crypto trader and influencer, Lark Davis, CPI can wreck crypto prices because macros still dictate the market price of crypto.
Economists expectations after Karine Jean-Pierre’s discussion
When the Federal Reserve meets at the end of the month, economists expect another “jumbo” rate rise. While acknowledging that the June numbers will be “highly elevated” and “backward-looking,” the White House has taken steps this week to keep expectations in check. There is a sharp decrease in the prices of energy related elements.