Hot Inflation Boosts USD Yields, Crypto ETF Inflows Surge
July PPI spiked +0.9% MoM versus +0.2% expectation, led by professional services. University of Michigan inflation expectations rose to 4.4% (1yr) and 3.4% (5–10yr), driving the US dollar and Treasury yields higher.
In crypto markets, Bitcoin and Ethereum prices treaded water as Treasury Secretary Bessent confirmed no further government Bitcoin purchases or gold reallocations. Meanwhile, Bitcoin and Ether ETFs recorded record weekly inflows of $17bn, pushing them into the top five equity funds.
Market focus now turns to Fed Chair Powell’s Jackson Hole speech, where few dovish surprises are anticipated given the inflation backdrop. With consumer sentiment diverging from income outlooks and fund manager cash at cycle lows, crypto traders should brace for volatility ahead of September.
Neutral
Mixed signals from hot inflation prints and record ETF inflows point to a neutral outlook. The unexpected PPI jump and elevated inflation expectations drove USD and Treasury yields higher, creating short-term headwinds for crypto prices. However, strong Bitcoin and Ether ETF inflows of $17bn underscore institutional demand and provide support. Historically, similar yield spikes have weighed on crypto until strong ETF demand returned. With Jackson Hole unlikely to deliver fresh dovish cues and market positioning at frothy levels, crypto traders face balanced risks and opportunities in both directions.