A busy week lies ahead on the United States economic calendar, and all eyes are on key inflation reports before next week’s Federal Reserve meeting.
Markets declined last week after the US jobs reports confirmed that the labor market is visibly slowing down. Crypto assets have been range-bound over the weekend, awaiting another week that is packed with key inflation data.
The Federal Reserve has two mandates: maximum employment and stable prices, and investors are about to receive data on the second mandate’s trends this week.
“It’s all about inflation this week ahead of a pivotal Fed meeting that is 10 days away,” said the Kobeissi Letter.
The August Producer Price Index (PPI) report is released on Wednesday, providing input costs for producers and manufacturers, which relate to the costs of consumer goods and retail prices. PPI reports are leading inflation indicators that are keenly watched by investors and analysts.
More inflation data will be released on Thursday, with August’s Consumer Price Index (CPI), which is one of the central bank’s key measures of inflation. CPI reports reflect price trends across the economy and directly impact consumer spending and sentiment.
Friday is the third day of inflation data with the September Michigan Consumer Sentiment Index and Consumer Inflation Expectations preliminary readings. These reports summarize consumer confidence and long-term inflation expectations, which impact retail spending.
While US President Donald Trump claims there is no inflation, consumers will beg to differ, and this week’s figures could be influential as CPI has been increasing over the past few months due to his tariffs.
Bank of America economists had a gloomy forecast: “We expect year-on-year headline CPI should rise from 2.7% to 2.9%, its highest since last July,” they said.
The Kobeissi Letter also identified a key recession signal, which is “flashing red.”
US construction spending fell by 2.8% in July, one of the biggest drops since the 2008 Financial Crisis, and the sixth consecutive monthly decline.
Rising inflation is not good for risk-on assets such as crypto, as retail investors will be tightening their belts.
Markets remained flat over the weekend, but there was a minor uptick during Asian trading on Monday morning, with total capitalization reaching $3.91 trillion.
Bitcoin has been tightly rangebound over the past few days and moved to the top of that range at just over $111,000 on Monday morning.
Ethereum has oscillated around the $4,300 price range, where it was still trading at the time of writing.
The altcoins were having a better day with more green than red and larger gains for XRP, Solana, Dogecoin, and Hyperliquid.
