The Bureau of Labor Statistics reported on May 12 that the US consumer price index climbed 3.8% year-over-year in April, the hottest reading since May 2023. Economists had forecast 3.7%. Month-over-month, CPI rose 0.6%, double the consensus estimate, reshaping monetary policy expectations overnight.
Energy costs, driven by geopolitical tensions and rising gasoline prices, were the primary driver. Core CPI, excluding food and energy, rose 2.8% year-over-year and 0.4% month-over-month, signaling broad and persistent price pressures.
For the Federal Reserve, the report effectively eliminates the possibility of rate cuts in 2026 and raises the probability of rate hikes later this year. Treasury yields jumped and equities fell as growth stocks took the hardest hit.
Bitcoin showed resilience, trading in a range of $80,600 to $81,000 following the report. No major sell-off occurred, though higher rates increase the opportunity cost of holding non-yielding assets like Bitcoin, a dynamic that triggered the 2022 bear market.