U.S. inflation cooled more than expected to 2.4% YoY in the January CPI release, delivering a powerful macro tailwind for crypto, stocks, and risk assets as markets price in an easier Fed path ahead. CPI: From December to Today The headline U.S. Consumer Price Index slowed sharply to 2.4% year-on-year in January 2026, down from 2.7% in December and beating consensus expectations of 2.5%. Core CPI ticked lower to 2.5% YoY from December's 2.6%, with monthly gains at 0.3% for headline and 0.2% for core, below the 0.3% forecast for core. This marks the softest reading since mid-2021, driven by easing shelter costs and energy prices, though still above the Fed's 2% target. Cleveland Fed nowcasts had pegged mid-2% levels for January and February, confirming a steady disinflation glide-path that eases ”higher-for-longer” rate fears without signaling recession risks. Market Reactions Across Assets Stocks rallied hard post-release: S&P 500 futures jumped 0.8%, Nasdaq surged 1.2% as tech rebounded from AI-driven sell-offs, and Dow climbed on cyclical strength, reflecting relief over benign core data. Rates markets pushed 2-year Treasury yields down 5bps to 4.1%, repricing higher odds for mid-2026 Fed cuts. Bitcoin broke higher toward $66,000, shrugging off pre-CPI $60k support worries, while Ethereum and altcoins gained 4-6% on revived liquidity hopes. Crypto desks noted the print relaxes funding cost pressures, boosting institutional inflows versus sticky inflation's drag on speculative bets. What It Means for Crypto and Stocks This 2.4% CPI print locks in a macro-sensitive but bullish setup: disinflation bolsters Fed cut odds (now ~75% for June), fueling liquidity for Bitcoin's mid-$70k targets and large-cap alts. Stocks benefit similarly, with growth names leading if yields keep falling, though Trump's tariff risks could reheat inflation later. Yet core stickiness above 2% means event volatility persists, traders brace for chop around every release rather than straight-line gains.
