The unexpected drop in the US March CPI increases the likelihood of a rate cut by The Federal Reserve (FED), but why do Bitcoin and US stocks fall instead of rising?

The U.S. Bureau of Labor Statistics released the latest consumer price index (CPI) yesterday (10) evening, and the report showed that inflationary pressures in the United States eased in March, which strengthened market confidence in the Fed's interest rate cut in June. However, the reaction of the US stock and cryptocurrency markets was not optimistic, and both fell sharply. (Executive Summary: Fed Releases March Meeting Minutes: U.S. Inflation and Economic Slowdown Risks; The market expects two remaining interest rate cuts this year) (Background supplement: U.S. Treasury blood collapse! Yields soared to a new 3-year high, and the United States was desperate to "stock and bond exchange rates fell three times") The US Bureau of Labor Statistics released the latest consumer price index (CPI) yesterday (10) evening. The report showed that the US CPI monthly growth rate unexpectedly fell by 0.1% in March, the first decline in nearly five years, below market expectations of 0.1% growth, and contrasted with the 0.2% increase in February. In terms of annual growth, the CPI slowed to 2.4% from 2.8% in February, slightly below market expectations of 2.5% to 2.6%; Meanwhile, the core CPI (excluding food and energy prices) rose 0.1% qoq, below expectations of 0.3%, while the annual growth rate fell from 3.0% to 2.8%, also below market expectations of 3.0%. The latest data suggest that US inflationary pressures seem to have eased somewhat in March. However, the core CPI remains above the Fed's long-term target of 2%, suggesting that the inflation trend has not fully subsided, and combined with the barriers to the global trade war launched by Trump, the underlying pressure on the economy remains. Fed June Rate Cut Expectations Rise Market expectations for Fed rate cuts have changed following the release of CPI data. According to the latest data from CME Group's FedWatch tool, although the current market believes that the Fed will most likely keep the current interest rate unchanged in May (69.1%), for the June interest rate decision, the market believes that the probability of a 1-yard rate cut has risen from 49.7% a month ago to 61%, and the probability of keeping the rate unchanged in June is only 14.5%, which is even less than the probability of a 2-yard rate cut in June (24.4%). However, it is still worth noting that Fed Chairman Jerome Powell stressed in a recent speech that the Fed is "in no hurry to adjust its policy stance" and will pay close attention to the impact of external factors such as tariffs on inflation. Therefore, some analysts believe that a slowdown in inflation may prompt the Fed to initiate a rate cut in the middle of the year, but perhaps only by 25 basis points rather than the more aggressive 50 basis points. Austan Goolsbee, president of the Federal Bank of Chicago, also believes that Trump's tariff policy is far larger than expected and quite unstable, suggesting that the Fed should wait and see, aiming to find a link between tariffs and inflation, rather than rushing to conclusions. The four major indexes of US stocks are all black Although the CPI data unexpectedly showed a slowdown in inflation, it may be because the White House memo showed that the tariff rate on Chinese imports has actually reached 145%, in addition to the 125% reciprocal tariff, including the 20% tariff imposed by Trump on Chinese imports from Fentanyl earlier this year. Let the shadow of the Sino-US trade war continue to hang over the market, and U.S. stocks gave up significantly on the 10th: The Dow Jones Industrial Average tumbled 1,014.79 points, or 2.50%, to close at 39,593.66 points The S&P 500 fell 188.85 points, or 3.46%, to close at 5,268.05 points The Nasdaq plunged 737.66 points, or 4.31%, to close at 16,387.31 points The Philadelphia Semiconductor Index, which posted its biggest one-day gain in history yesterday, also plunged 337.15 points, or 7.97%, closing at 3,893.30 bitcoin kills $78,000 The cryptocurrency market is also not immune, the market that originally rebounded strongly on the previous (9th) day fell again last night as US stocks fell again, bitcoin all the way from $81,840 to the lowest of $78,462, almost giving back the previous day's gains. At the moment of writing, it is now at $79,569, down 3.67% in the past 24 hours. Among the other top ten tokens, due to multiple factors such as the sale of multiple giant whales and the decoupling of sUSD, Ethereum performed the weakest, losing $1,500 again earlier, and is now trading at $1,525 before writing, down 7.04% in the past 24 hours. Extended reading: sUSD stablecoin deanchored 16%: mechanism smashing pot, or a good opportunity to dig the bottom? The outlook for the U.S. economy under the impact of tariffs Although Trump has now relaxed his words and will suspend reciprocal tariffs in many countries for 90 days, China and the United States are still at odds with each other. So while the March CPI showed a retreat in inflation, experts warn that the lagging effect of tariffs could push prices higher in the coming months, especially in the areas of imported consumer goods and capital goods. Goldman Sachs analysts have predicted that if tariffs continue, the core CPI may rise to around 3% by the end of the year, putting pressure on consumer purchasing power and business costs. At the same time, the uncertainty caused by tariffs has led to a decline in business investment intentions, with economic growth expected to slow to 1.7% from 2.8% in 2024. This concern of "low growth and high inflation" may plunge the US economy into stagflation. In response, Fitch Chief Economist Brian Coulton also said: "The decline in core inflation in March will certainly be welcomed by the Fed, but we know that companies have already absorbed a lot of imports in January and February before the tariff increase, so the impact of the tariff hike on consumer prices has not yet been reflected." Therefore, the current market decline may be due to the uncertainty caused by tariffs, which is affecting investors' judgment - although US inflation has slowed, the impact of tariffs has not yet been reflected in economic data, and the market may be more inclined to wait and see. Related Reports The US Bitcoin Mining Crash "Actually Profited?" Mining experts: Trump tariffs will make mining machines in other countries super cheap As soon as the European Union approved a 25% retaliatory tariff on US products, Trump turned to... Who changed his mind? U.S. Department of Justice 'Dismantles Cryptocurrency Law Enforcement': Will Reduce Prosecutions for Exchanges, Mixers and Cold Wallet Cases: 〈The probability of the Fed cutting interest rates has increased, but why did bitcoin and U.S. stocks not rise but fall? This article was first published in BlockTempo's "Dynamic Trend - The Most Influential Blockchain News Media".