Asian stocks ticked higher Monday, tracking a record close on the S&P 500, but the real action for crypto is the shifting Fed calculus. The probability of a September rate hike has fallen to 44% from 67% a week ago, a move that typically takes pressure off Bitcoin and digital assets. Wednesday's CPI report is the next test, with oil and core goods prices threatening to muddy the picture.
Why the odds dropped
A soft US jobs report last week did the heavy lifting. With nearly 90% of S&P 500 earnings in, the macro picture is suddenly less hawkish than it looked on Monday. JPMorgan chief US economist Michael Feroli sees core CPI coming in at 0.22% — not firm enough to trigger a hike, he argues, though repeated prints near 0.3% could change the calculus. The market is listening: the 23-point slide in hike odds is the biggest weekly move in months.
What to watch in Wednesday's CPI
Economists expect headline inflation to rise 0.1% in July and core to gain 0.2%. The specific watch item is a potential rebound in core goods prices — a category that had been cooling for months. If that turns, it could offset the softer services side and keep the Fed on edge. Feroli's 0.22% forecast sits just above the consensus, a sign that the risk is skewed toward a hotter print.
Oil and the Strait of Hormuz
Oil is the wildcard. Brent crude rose 0.9% to $84.32 a barrel, while US crude gained 0.7% to $78.74. Iran said a deal with Oman defining new shipping lanes through the Strait of Hormuz is in its 'final stages,' but reiterated the waterway would only reopen once the US met separate conditions. Shipping through the strait remains minimal, and sustained pressure there feeds directly into headline inflation — the exact kind of shock that could force the Fed's hand.
Dollar, gold and the earnings backdrop
The dollar dropped broadly, with the euro near a seven-week high at $1.1557. Gold climbed more than 7% last week to $4,342 an ounce — a classic risk-off hedge that often moves in sympathy with Bitcoin. On earnings, the S&P 500's per-share profit is up 30% year-on-year, with AI stocks posting median growth of 28% against 12% for the rest of the index. That strength is why stocks can shrug off a hawkish Fed, but crypto doesn't have that luxury.
For Bitcoin, the next 48 hours are straightforward: a soft CPI print on Wednesday would cement the case for a pause, and a hot one — especially on core goods — could send rate expectations right back up. The oil market isn't helping either. All eyes are on the Bureau of Labor Statistics at 8:30 a.m. ET.
