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The Bitcoin and crypto market is reeling ahead of today’s release of US PCE September inflation.
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Wall Street expects PCE to remain strong, with headline inflation at 2.8% and core PCE at 2.9%.
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The cooling PCE inflation report would block a 25 basis point Fed rate cut.
Data on U.S. PCE inflation, the Federal Reserve’s preferred inflation gauge, is expected to be released today. Wall Street estimates that September’s PCE and Core PCE numbers are similar to the previous month, with overall PCE up slightly to 2.8%.
This is the last data the FED consults before making its rate decision and economic projections. Any change in estimates could significantly change the Fed’s rate cut chances. Bitcoin and the crypto market are bracing for volatility as today’s inflation report coincides with the crypto options expiration.
The U.S. Bureau of Economic Analysis will release September U.S. PCE inflation on Dec. 5, which was delayed due to the extended government shutdown. The market will directly see the PCE report from next December to the end of January next year.
Economists forecast a slight rise, with headline PCE inflation expected to increase by 0.3% month-on-month (MoM). Year-over-year (YoY) print is projected at 2.8%. Meanwhile, core PCE is projected at 0.2% month-on-month and 2.9% year-over-year. This matches the PCE inflation figure for August, but remains above the Fed’s 2% target.
Nick Timiraos of the Wall Street Journal said: “With the CPI and PPI now in hand for September, core PCE inflation stands around +0.22%, very close to the printed core CPI for that month.” » Any drop in monthly publications will bring inflation down to 2.8%.
Wall Street giants including Barclays, Citi, Goldman Sachs, Nomura, UBS and others see PCE holding firm at 2.8% and core PCE at 2.9%.
According to Truflation, the PCE is now stabilized at 2.15%, one of the lowest levels this year. Meanwhile, Truflation’s core PCE is at 2.62% today. The Bank of Japan’s rate-hiking policy has pushed up Japanese bond yields and increased the volatility of risk assets, including Bitcoin.
Recently, Treasury Secretary Scott Bessent said there was no risk of recession for the U.S. economy or rising inflation. However, Fed officials’ stance on the December Fed rate cut remains mixed.
