Bitcoin Steady as September PCE Inflation Matches Expectations
Generally, I am thinking that the latest inflation data from the Bureau of Economic Analysis shows that the Personal Consumption Expenditures price index rose to 2.8% year-over-year in September, which is basically what most people were expecting. Normally, Core PCE, the Federal Reserve’s preferred measure of inflation, came in slightly lower at 2.8%, down from 2.9% in August, and that is kinda good news.
Obviously, the Bureau of Economic Analysis released the long-awaited September PCE inflation data on December 5, showing a year-over-year increase of 2.8%, in line with market expectations and up from 2.7% in August, which makes sense.
Usually, Core PCE, which excludes volatile food and energy prices, also came in at 2.8%, down from 2.9% in August and slightly better than the forecast of 2.9%, that is what you would expect.
Inflation Data Overview
Apparently, the inflation data is showing that the Personal Consumption Expenditures price index is rising, but not too fast, and that is a good thing for you and your investments. Normally, when the inflation rate is high, your money is worth less, so it is good that it is not too high.
Sometimes, the Core PCE is a better measure of inflation because it does not include food and energy prices, which can be very volatile, and that is why it is the Federal Reserve’s preferred measure.
Generally, the Bureau of Economic Analysis is the organization that releases the inflation data, and they do it every month, so you can stay up to date on what is happening with inflation.
September PCE Details
Normally, the September PCE inflation data is released in December, and it shows what happened with inflation in the previous month, so it is a little bit old news, but still important.
Usually, the year-over-year increase in the Personal Consumption Expenditures price index is what people look at to see what is happening with inflation, and in September it was 2.8%, which is not too bad.
Obviously, Core PCE is also important, and it came in at 2.8% in September, down from 2.9% in August, which is a good sign.
Bitcoin’s Reaction
Apparently, Bitcoin prices remained stable around $92,000 following the release of the inflation data, which is good news for people who own Bitcoin.
Sometimes, the technical setup for Bitcoin shows resistance at $93,000 and a descending trendline that has capped rallies since November 11, which means it might be hard for Bitcoin to go up in price.
Generally, the total crypto market cap is currently at $3.1 trillion, which is a lot of money, and it shows that people are still interested in cryptocurrency.
Alternative Real-Time Inflation Data
Normally, alternative data providers like Truflation have different numbers for inflation, and their real-time PCE index stands at just 2.13%, with core PCE at 2.6%, which is lower than the official numbers.
Usually, this gap between the official numbers and the alternative numbers underscores the challenge for Fed Chair Jerome Powell, because the September data is already two months old and may not reflect current economic conditions.
Obviously, it is hard to know what to do when the numbers are different, but it is good to have different perspectives.
Fed Signals & Labor Market
Apparently, the Fed is facing mixed signals, because while core PCE is showing signs of cooling, headline inflation remains above the Fed’s 2% target, which is not good.
Sometimes, recent jobless claims data came in stronger than expected at 191 K, suggesting unexpected resilience in the labor market, which is good news for the economy.
Generally, markets are weighing whether the improving core inflation and the end of quantitative tightening (QT) justify a rate cut, or if the robust labor market argues for a more cautious approach, which is a hard decision.
Equity Market Reaction
Normally, the S&P 500 surged 0.5% on the news of the softer-than-expected core PCE figure, adding $3.3 trillion since the November 21 low, which is a lot of money.
Usually, Bitcoin briefly dipped below $90,000 even as other equity markets rallied on the inflation relief, highlighting the unique dynamics in the crypto market, which can be volatile.
Obviously, it is good to stay up to date on what is happening in the markets, so you can make informed decisions about your investments.
Expert Commentary
Apparently, Professor Steve Hanke of Johns Hopkins noted that the M2 money supply is growing at just 4.5% year-over-year, below his “Golden Growth Rate” of around 6.3%, which is consistent with hitting the Fed’s 2% inflation target, which is good news.
Sometimes, this suggests that the Fed may have room to ease policy without risking renewed inflation pressures, which would be a good thing for the economy.
Generally, it is good to listen to what experts have to say, because they often have valuable insights.
Outlook Ahead of the FOMC
Normally, as the market digests these mixed signals, all eyes are on the upcoming FOMC meeting on December 9-10, which will be important for the economy.
Usually, with core PCE moving in the right direction but still above target, a December rate cut seems probable but not guaranteed, which is a hard decision.
Obviously, the Fed’s decision will likely hinge on whether they view the resilient labor market as a sign that the economy doesn’t need additional stimulus, which is a good thing to consider.
