CPI posts the biggest drop in four years, yet Waller says “not satisfied”

Yesterday, the entire crypto circle was popping champagne.

U.S. June CPI fell 0.4% month over month, the largest single-month drop since April 2020. Core CPI rose 2.6% year over year, below the expected 2.8%. Then the PPI also came in cold—up 5.5% year over year, far under the expected 6.2%.

As soon as the data hit, Bitcoin was pulled straight back from around $63k to the $65k area. The Nasdaq climbed nearly 1 point. The market was shouting: Inflation has turned! Rate hikes are gone! The bull market is back!

Then Waller took the stage.

This new Fed chair said, in front of the whole United States:

“I’m not satisfied with any inflation indicator.”

Not satisfied.

CPI posts the biggest drop in four years—you’re not satisfied. Core CPI falls to 2.6%—you’re not satisfied. PPI is broadly below expectations—you’re still not satisfied.

Are you not seeing the data, or do you simply not want to see it?

Waller’s exact words were: “Recent inflation data cannot perfectly reflect the state of underlying inflation.” He added one more thing— the Fed has missed its 2% inflation target for 63 straight months.

63 months. More than five years.

You pass one exam, but in the last five years you’ve failed every one—you think the teacher will praise you?

Waller won’t. He even put out a direct message: the interest-rate tool “is still on the table.”

“Still on the table”—those four words matter ten thousand times more than the CPI data itself.

The market still hasn’t figured out one thing: Waller and his predecessor aren’t the same kind of person at all.

In the Powell era, the market was used to: the better the data, the looser the policy. When inflation drops, rate-cut expectations jump. Traders were trained into reflex reactions.

But Waller doesn’t buy that.

At the hearing, he made it very clear: “Some people may look at today’s data and say ‘mission accomplished,’ but that’s not my view.”

He even labeled the high inflation of the past five years as “a failure on the Fed’s part.”

This is someone who wants to settle every account with the predecessor. Someone who wants to stamp his own hawkish mark into the history of the Fed.

Would someone like that loosen just because of a month of good data?

Don’t dream it.

Just look at the CME numbers.

The probability of a rate hike in July has indeed dropped to 11.2%, but what about September? The probability of cumulative 25 basis points is still 44%.

44%.

The market talks with its mouth—“data is good, no hikes”—but the body is honest: nearly half are betting on another hike in September.

What is this called? This is called an “expectation gap trap.”

You think CPI being good automatically means policy loosens. But Waller tells you: not necessarily. You think you can go all-in. But that cut in September might be on the way.

The harshest part is that Waller made a big move too—setting up five cross-domain working groups to re-review the Fed’s entire inflation framework from scratch, starting from “a blank sheet of paper.”

What does it mean? It means he doesn’t trust the existing inflation indicators. He wants to build his own.

The CPI, PPI, and PCE you’re seeing now may not be the basis for Waller’s decisions in the future. He wants to come up with his own set of things.

A Fed chair who even wants to overturn and rebuild the data standards—do you think he would pivot just because one month’s CPI month-over-month went negative?

“You think inflation data is for the Fed, but actually the Fed is the one setting the standards for inflation data.”

Waller is redefining what “inflation” is. In that process, any “good news data” could be overturned by a single sentence from him.

So my conclusion is simple:

In the short term—CPI data really has given the market a breathing window. Bitcoin bounced from 63K back to 65K; this rebound is real. Not hiking in July is also likely.

But in the medium term—don’t be fooled by a single datapoint.

The 44% probability of a rate hike in September is sitting right there. Geopolitical tensions in the Middle East could push oil prices up at any time. Waller’s “zero tolerance” isn’t a slogan—it’s his political lifeline.

If your position is based on the logic that “CPI is better, and the Fed will loosen,” I’d suggest you get clearer.

Waller has already said it plainly: “not satisfied.”

If you insist on interpreting “not satisfied” as “good news,” that’s your own problem. But when you get liquidated, don’t blame anyone for not warning you.

Do you think Waller is genuinely dissatisfied with the data, or is he just sending the market a preemptive warning? #PreIPOs第二期OpenAI认购 #盘前合约上线长鑫存储 #韩国KOSPI暴跌5%触发熔断 $BTC $ETH $BZ