Softer CPI and Labor Data May Prompt Fed Rate Cuts in September and December!

Key Points:

• Anticipated lower CPI numbers and recent weaker labor data suggest the Fed may cut rates in September and December.
• Fed Chair Jerome Powell’s testimony indicates the tightening cycle is achieving its goals, aligning with market expectations for a policy shift.
• A surge in S-1 filings for Ethereum spot ETFs suggests imminent trading, potentially attracting significant capital inflows and impacting market dynamics.

QCP Capital expects that tomorrow’s softer Consumer Price Index (softer CPI) numbers might further strengthen the Federal Reserve’s inclination toward rate cuts in upcoming September and December meetings.

This comes after a spate of softer-than-anticipated labor stats in the past week and a notably dovish testimony from Fed Chair Jerome Powell to the Senate.

Powell’s testimony signalled that the Fed’s aggressive tightening cycle might well reach its intended effect, amplifying market expectations of easing. “The combination of subdued labor data and softer-than-expected upcoming prints for core CPI would further show a strong case for a sooner Fed pivot into cuts,” said QCP Capital in a note.

Read more: QCP Capital Predicts BTC to Hit 74K, Expects ETH to Outperform with New ETF!

Ethereum Spot ETFs Could Impact Market Dynamics

Ahead of the CPI data, traders have just received last week’s labor reports that pointed to a cooling jobs market, contributing to fewer job openings and lower wage growth—two elements that hint at fading inflationary pressures and, therefore, diminishing the need for more interest rate increases shortly. A continuation of this trend in the upcoming CPI report could be the last piece of the puzzle, officially confirming a transition by the Fed into accommodative policy, QCP added.

On top of the macroeconomic data, there is a deluge of S-1 filings for Ethereum (ETH) spot exchange-traded funds. This could very likely foreshadow that trading in such ETFs will start very soon and, in turn, add some more complexity to market dynamics. Ethereum spot ETFs approval, and the start of trading may attract huge capital inflows back into the markets.