Inflation Twin Indicators Continue Cooling, the “Big Pie” Liquidation Logic Under the Liquidity Turning Point

On the evening of July 15, the US June PPI data was officially released. The year-over-year growth rate fell to 5.5%, while the month-over-month figure dropped by 0.3%, marking the largest single-month decline since April 2020 and significantly below market expectations of 6.2%. Just the day before, the June CPI data had also weakened across the board: month-over-month down 0.4% and year-over-year down to 3.5%. The two major inflation indicators signaled cooling for two consecutive days, as global risk-asset pricing logic is being comprehensively rebuilt.

Many traders get trapped in the up-and-down of the data itself, while ignoring the market’s core—what the market actually trades is never the numbers themselves, but the underlying US dollar liquidity cycle. Over the past two years, global major asset classes have remained under the shadow of high inflation. The underlying logic has been exceptionally clear: as long as prices stay elevated, the Federal Reserve dares not easily pivot to easing; sustained high-interest-rate conditions keep tightening market liquidity. Whether it’s US equities tech stocks or crypto assets, they have consistently lacked durable “fuel” for sustained rallies, leaving long stretches of sideways trading.

Breaking down this PPI release shows it’s not hard to see that the pullback in energy prices is the key driver behind this cooling: in June, the energy sub-item fell 6.4% month-over-month. Even just gasoline prices plunged 12% in a single month, contributing two-thirds of the overall decline. Meanwhile, food prices also declined by 0.6%, and terminal goods prices overall fell 1.4%, indicating that pressure at the upstream production end has clearly eased. More worth attention is that after excluding food and energy, core PPI year-over-year rose only 4.7%, also below market expectations—meaning inflation pressure is gradually transmitting from the energy component to the core components, not just a short-term fluctuation in a single category.

After the data landed, the entire market quickly repriced monetary policy shift: the 2-year US Treasury yield fell by 8 basis points in a single day. CME’s FedWatch tool shows the probability of a July rate hike dropped directly to below 13%, while expectations for a September rate cut rapidly warmed to close to 70%. For US equities, this round of tech and AI maintaining high valuations is not supported by an earnings surge, but by a broad expectation that future funding costs will decline. Now that inflation “turning point” signals are confirmed, easing expectations are further fermenting, directly driving a collective re-pricing higher for risk assets.

This logic has also applied precisely to the crypto market. Fueled by the double inflation-better-than-expected release, plus spot ETFs continuing to record net inflows, signals that institutions are positioning on dips have become clearer. In the early hours, BTC quickly surged to the 65,518 USD line, refreshing the highest level in nearly half a month. As concentrated liquidations triggered cascading momentum, the short-term liquidation scale across the whole market exceeded $200 million. But the rally did not continue in a straight line: after topping out, it quickly fell back to around 64,800 for a narrow range consolidation. The core reason is that geopolitical conflict uncertainty is still suppressing chase-the-price willingness. Market participants also remain cautious about the possibility that the Middle East situation could once again push up oil prices and interrupt the inflation-cooling rhythm, so overall sentiment toward chasing pumps remains relatively prudent.

From the current outlook, inflation cooling does open up imagination space for policy easing for risk assets, but it is far from the level of a one-way bull market. Federal Reserve Chair Wash has already stated clearly that they cannot declare the fight against inflation over just because of one month of data. The stickiness of services inflation—the core component—as well as energy-price variables stemming from geopolitical conflicts, could cause inflation trends to turn back and forth. For crypto traders, a range-based approach is more suitable right now. The key support below to watch is 64,200 USD; for the short term, the upside pressure to keep an eye on is 65,500 USD. Avoid going heavy on chasing pumps, manage your position size, and wait for the trend to be further confirmed.