Key points:
- US Inflation Running Hot Still
- Cryptocurrencies Fall With Riskier Assets
- Ethereum Merge Updates
A far higher than expected print for US inflation data on Tuesday, with various measures of the Consumer Price Index (CPI) still running hot. This saw riskier assets plunge lower, with US equity indices suffering their worst down day since 2020 and produced significant losses across cryptocurrency markets. This negative event comes right in the middle of the much-anticipated and much-watched Ethereum Merge.
US Inflation Running Hot Still
With the US Federal Reserve far more hawkish since the Jackson Hole summit, global financial markets have been awaiting the release of the latest US inflation data, which was published on Tuesday. The expectation was for moderating inflation, allowing for an easing of the more hawkish tone that has been set by the US Central bank and global central banks throughout 2022 and, more notably, over the summer.
US headline CPI increased by 0.1% in August, and the core number, excluding food and energy, of the inflation gauge rose 0.6%, which were both higher than expected. The consensus amongst economists was for headline inflation to fall 0.1% and the core number to increase 0.3% (from Dow Jones estimates). Year-on-Year this saw the headline number rise 8.3%, and when excluding the volatile food and energy costs, CPI rose 6.3% from the same month in 2021!
Also Read: A Guide to the Best US S&P 500 Index Funds
Cryptocurrencies Fall With Riskier Assets
This far higher than anticipated level of price increases will keep the US central bank very much on the hawkish path, with risks now for an even more aggressive stance on interest rates increases for the balance of 2022 and into 2023. The impact was significant for global financial markets, with risky assets plunging lower, with US equity indices suffering their worst day of losses since June 2020, the Dow sliding 3.9%, the S&P500 down 4.3% and the Nasdaq Composite wiping off over 5%!
Cryptocurrency markets stayed correlated to riskier assets and the US stock averages as they have been throughout 2022, also suffering notable losses. Bitcoin (BTC) erased over 9%, whilst the second largest cryptocurrency by capitalisation, Ether, slid more than 6%. This is of particular note, as the Ethereum network is in the midst of the much-awaited Merge.
Ethereum Merge Updates
The Ethereum Merge is underway, and although there is little to add at the moment, we wanted to point out some useful resources to follow and keep up to date on the Merge process. According to Ethereum.org
“The Merge is happening on 14/15th September. The precise timing depends upon how the network hash rate develops and it can be monitored at bordel.wtf. The Merge will be triggered when the network passes a threshold accumulated difficulty, known as the TTD (terminal total difficulty). You can track total difficulty milestones using the Nethermind TTD bot.”