CPI Data Boosts Risk Assets as Fed Rate Hike Odds Plummet

Recent inflation data has given risk assets a boost, including cryptocurrencies. The Consumer Price Index (CPI) came in softer than expected, pushing Federal Reserve rate hike odds from 36% to just 14%. This shift in market expectations led to a weaker US dollar and a subsequent increase in the price of risk assets.

Ethereum outpaced Bitcoin, climbing back towards $2,000 for the first time since late June. The cryptocurrency's relative strength is something to track, as it has historically been a leading indicator of market trends.

The Fed's rate hike odds shift is not a minor adjustment, and markets are treating it as meaningful. However, the question remains whether one CPI print is enough to change the trajectory or if this is a single data point in a longer tug-of-war between sticky inflation and slowing growth.