August 2025 Inflation Update
The Consumer Price Index (CPI) for All Urban Consumers increased by 0.4% in August, accelerating from July's 0.2% rise, according to the U.S. Bureau of Labor Statistics. This brought the year-over-year all-items inflation to 2.9%. Shelter costs were the primary driver, rising 0.4% monthly, while food prices increased 0.5% and energy saw a 0.7% jump, mainly due to a 1.9% surge in gasoline. The core CPI, excluding volatile food and energy components, also rose by 0.3% in August, maintaining a 3.1% year-over-year increase.
While shelter costs contributed significantly to the overall CPI, year-over-year shelter inflation actually saw a slight moderation, decreasing to 3.6% in August from 3.7% in July. Conversely, core CPI excluding shelter accelerated to 2.7% year-over-year in August, up from 2.5% in July, indicating increased inflationary pressure in other sectors. Complementary data from the Cleveland Fed reported that both median CPI and trimmed-mean CPI increased by 0.3% in August, with the median CPI holding steady at 3.6% year-over-year.
Shifting Housing Market Dynamics
The housing market is currently navigating a period of significant shifts, marked by sustained declines in mortgage rates and a notable change in homeowner borrowing patterns. Mortgage rates have consistently trended lower for the past four months, reaching an 11-month low following weaker jobs reports in August and September. Despite this, the "Home ATM" phenomenon, where homeowners heavily borrowed against their home equity, has largely ceased. While overall mortgage debt increased by $108 billion in Q2 2025, this figure primarily reflects new home purchases rather than equity withdrawal, according to the Federal Reserve's Financial Accounts of the United States.
Concurrently, the supply side of the market is experiencing a notable increase in available homes. Altos Research reports a significant rise in single-family home inventory for 2025, with active listings up 37.8% from their seasonal low in January. This increase is larger than typical, and current inventory levels are 20.5% higher than the same period in 2024, though still 9.8% below 2019 figures. Despite this rise in inventory, house prices have shown a slight year-over-year increase, as indicated by the September ICE Mortgage Monitor, presenting a complex picture of supply expansion alongside modest price appreciation.
UK inflation held steady in July at 3.8%, but food prices climbed for the fifth consecutive month, influencing the Bank of England's upcoming interest rate decision.
The EU aims to strengthen cooperation with India in defense and security, while simultaneously urging New Delhi to cease aiding Russia in circumventing sanctions.
Temu's UK operation nearly doubled its revenues to $63.3m and pre-tax profits to $3.9m last year, reflecting strong consumer demand for its budget products.
The EU is proposing to downgrade trade ties with Israel, including imposing tariffs and sanctioning ministers, due to alleged human rights abuses in Gaza.
Goldman Sachs reports that AI has added $160 billion to "true GDP" since 2022, significantly undercounted by official US GDP figures which only reflect $45 billion.
A planned deal to eliminate US tariffs on British steel was unexpectedly shelved just hours before Donald Trump's state visit to the UK.
Bitcoin Surges as Treasury Stocks Decline
Bitcoin's price is experiencing a significant surge, nearing $117,000, while companies that hold substantial Bitcoin on their balance sheets, known as treasury stocks, are witnessing a sharp decline in their market value. This divergence highlights a critical shift in market dynamics as the broader cryptocurrency market matures, separating the performance of the underlying asset from its corporate investment vehicles.
The collapse of these treasury stocks, including MicroStrategy (MSTR) and Nakamoto (NAKA), is largely attributed to an oversupply of shares meeting insufficient demand. The "paper bitcoin summer delusion" appears to be concluding, with NAKA notably falling 50% after its S3 PIPE shares restriction period ended, indicating a market correction for these investment vehicles.
MicroStrategy, often considered a benchmark in this sector, is also struggling, with its stock premium compressing significantly. This trend suggests that the market is re-evaluating the intrinsic value of these companies beyond their direct Bitcoin holdings, questioning whether they offer additional value or merely act as glorified ETFs. The end of the paper bitcoin summer delusion marks a new phase for market participants.
Despite the struggles of treasury stocks, Bitcoin's price itself remains resilient, having jumped almost 2% on the day without any specific news. This performance underscores Bitcoin's independent strength and its potential for continued growth, signaling a robust underlying asset even as the speculative appeal of associated corporate stocks diminishes.
Ethereum's Supply Crunch and ETF Demand Intensify
Ethereum is currently experiencing a significant supply crunch, a situation primarily fueled by a notable resurgence in demand from Ethereum Exchange Traded Funds (ETFs). This renewed institutional interest is directly impacting the availability of Ether, setting the stage for potential market shifts as demand outpaces accessible supply.
Adding to this scarcity, on-chain data indicates a consistent decline in the total reserves of Ether held by cryptocurrency exchanges. This reduction in readily available supply often precedes price appreciation and coincides with a growing optimistic sentiment within the trading community, where many are adopting bullish positions, signaling confidence in upward price potential.
The confluence of increased ETF demand, dwindling exchange reserves, and positive market sentiment suggests that Ethereum may be poised for a significant price increase in the near future. Market observers are closely analyzing these developments to forecast the potential impact on Ether's valuation and its broader position in the cryptocurrency market.
21Shares launched two new crypto ETPs, the Artificial Superintelligence Alliance ETP (AFET) for decentralized AI and the Raydium ETP (ARAY), increasing its European offerings to 50.
Bitwise Asset Management filed with U.S. regulators for the nation's first ETF dedicated to stablecoins and tokenized assets, aiming to bridge traditional finance with the blockchain sector.
House Speaker Mike Johnson met with crypto industry leaders, including Coinbase CEO Brian Armstrong, to discuss legislation fostering industry growth in the U.S..
Santander's digital arm, Openbank, launched regulated cryptocurrency trading services in Germany and other markets, emphasizing EU-compliant security for major tokens.
The real-world asset (RWA) market has surpassed $30 billion, propelled by the tokenization of treasuries, private credit, commodities, and equities.
Google launched its Agent Payments Protocol (AP2) to standardize AI-driven payments, integrating cryptocurrencies, stablecoins, and fiat with support from major crypto entities.
