Hot April CPI lifts yields, cuts Fed rate-cut odds, Bitcoin dips

The U.S. Consumer Price Index for April increased 0.4% month-over-month and 2.8% year-over-year, above economists’ median forecasts of 0.2% and 2.7%. The report, released May 13, coincided with the 10-year Treasury yield climbing to 4.44%.

Market pricing shifted after the print. The CME FedWatch tool showed a 97.1% probability the Federal Reserve will leave rates unchanged at its June meeting and gave more than a 65% chance that the policy rate remains the same through year-end. Several large banks moved their forecasts for the first rate cuts into 2027 or 2028.

Stock futures fell and the dollar strengthened following the release as investors reassessed interest-rate expectations.

Bitcoin fell about 1.2%, briefly touching $79,933 before settling near $80,000. Traders referenced rising Treasury yields as a factor, since higher yields increase returns on fixed-income instruments relative to riskier assets.

Some market participants described Bitcoin’s reaction as consistent with a high-risk asset, noting it declined after the inflation surprise rather than rising. Arthur Hayes, co-founder of BitMEX, predicted Bitcoin could reach $126,000, arguing that global liquidity trends will outweigh short-term inflation shocks.

The Consumer Price Index tracks changes in prices paid by consumers for goods and services and is a key input for Federal Reserve policy decisions. When inflation readings come in above expectations, market estimates for the timing of monetary easing are often pushed back, which can influence yields, currencies, stocks and risk assets such as cryptocurrencies.