Investors were eagerly waiting for the U.S. PCE inflation data after the U.S. GDP data showed that the economy had advanced better than the market expectations in the first quarter. Notably, the Personal Consumption Expenditure (PCE) and the Core PCE inflation data are key gauges to track the current inflation level. Besides, these are also key tools that the U.S. Federal Reserve considers while planning their interest rate plans.
US PCE Inflation Soars 2.7%
The recent data by the Commerce Department showed that the U.S. PCE inflation increased 0.3% in April, in line with the market expectations. Notably, the PCE data for March also soared at a pace of 0.3%. On a year-over-year basis, the PCE inflation jumped 2.7%, which also comes in tandem with Wall Street expectations.
Simultaneously, the Core PCE inflation, excluding food and energy prices, jumped 0.2% in the last month, after soaring 0.3% in the prior month. Meanwhile, on a yearly basis, the Core PCE inflation jumped 2.8%, a similar surge from March.
Although the Core PCE cooled last month, the inflation level still remains higher than anticipated, dampening the investors’ sentiment. In addition, the inflation remaining above the central bank’s expectation of a 2% target range has dampened the investors’ sentiment so far.
Having said that, the traders are seeking clarity over potential rate cuts by the U.S. Federal Reserve, as the higher policy rates have dampened the risk-bet appetite of the market participants.
Bitcoin Price Records Slight Recovery
The Bitcoin price noted a slight recovery, despite the latest inflation data. Meanwhile, following the PCE inflation release, Bitcoin price soared 0.95% to $68,773.23, while its trading volume remained muted at $27 billion over the last 24 hours.
Meanwhile, the U.S. 10-year Bond Yield slipped 0.73% to 4.515, while the U.S. Dollar Index Futures fell 0.27% to $104.380. Notably, the latest PCE data has further fueled concerns over a dovish stance by the U.S. Federal Reserve.
According to the CME FedWatch Tool, there is a 99% probability that the Federal Reserve will not make any changes to its policy rates at its upcoming June meeting.
Meanwhile, Matrixport co-founder Daniel Yan recently highlighted the significance of the Personal Consumption Expenditures (PCE) data for April. In a social media post, Yan stated that a 0.2% month-on-month increase for both Core PCE and PCE would be bullish for the market, while a 0.3% increase would be bearish. If one measure is at 0.2% and the other at 0.3%, Yan indicated a neutral outlook.
