- U.S. inflation forecast suggests a slight surprise, with CPI expected to rise 2.8% YoY, above expectations.
- China’s inflation slows, with March CPI flat and PPI dropping more than expected.
- Traders braced for volatility ahead of the reports.
Global markets are on edge Thursday as key inflation reports from the U.S., China, and Japan are to be released, sparking volatility as traders and the broader crypto market brace for volatility from the latest economic signals.
What Does US Inflation Data Suggest?
The U.S. Consumer Price Index (CPI) is expected to decrease by 0.1% after rising by 0.1% in March, slightly above the expected flat reading. On an annual basis, CPI is forecast to rise 2.8%, compared to the 2.5% expectation. Core CPI (excluding food and energy) is also expected to climb by 0.3% month-over-month, exceeding predictions.
Meanwhile, U.S. unemployment claims are projected to tick up slightly to 223,000, above the anticipated 219,000. While not alarming, this could add to recent indications of a gradually cooling labor market.
Is China Facing Deflationary Pressures?
China’s March CPI came in flat year-over-year, missing the 0.7% consensus forecast. On the producer side, the Producer Price Index (PPI) is expected to drop by 2.3%, more than the anticipated 2.2% decline.
This combination suggests weak domestic demand and ongoing deflationary pressures in the manufacturing sector. New loans and M2 money supply data also point to tighter credit conditions.
Related: Bond Market Pushes Back on Rate Cuts as 10-Year Yield Hits 4.36%
Meanwhile, Japan’s Producer Price Index is expected to rise by 3.9% in March, nearly in line with the 4.0% forecast. Bank lending is expected to hold steady at 3.1% year-over-year, with the data offering little surprise for markets.
Why Are Markets Expecting Volatility?
Market commentator Martyparty flagged April 10 as a key day for inflation data, posting that an “insane day” was ahead, highlighting anticipated volatility across Japan, China, and U.S. reports.
The reaction across markets reflected those expectations. Treasury yields jumped, and traders adjusted bets on future rate moves.
These latest inflation readings may influence central bank decisions in the coming months. If US inflation proves stubborn, the Fed may hold off on cutting rates. In contrast, China’s weak data could increase pressure on its central bank to roll out more economic support.
What Could This Mean for Crypto?
Today’s inflation data holds potential implications for the crypto market. A hotter-than-expected U.S. CPI reading signals persistent inflation, which could delay the Federal Reserve’s interest rate cuts. This typically dampens risk appetite, potentially pressuring Bitcoin and altcoins in the short term.
Related: Crypto Ignores Trade War: Markets Rally Despite China’s 84% Tariff Hit on the US
Crypto assets often react sensitively to macroeconomic shifts, and the mixed signals from the world’s largest economies may lead to increased volatility. Currently, the crypto market is experiencing a relief rally, with Bitcoin rebounding above $82K after news of Trump’s 90-day tariff pause.
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