POWELL IS DISORIENTED NOW.
The U.S. PPI and core PPI have just been released, and it is a nightmare for the Federal Reserve.
The U.S. PPI was 3.4% compared to the expected 2.9%, its highest level since February 2025.
The U.S. core PPI was 3.9% compared to the expected 3.7%, its highest level since January 2025.
This means that core inflation has begun to heat up, and here’s why this is bad.
First of all, the impact of recent oil prices has just started to show its effect on inflation.
Unemployment is already rising while GDP clearly shows that the U.S. economy is struggling.
If we talk about other aspects of the economy:
The housing market has reached its most unaffordable level.
The gap between buyers and sellers is at its highest level in history.
The private credit market is showing signs of stress.
Tensions between China and Taiwan are raising concerns around the AI bubble.
And on top of that, global uncertainty seems to be increasing.
That’s why the market now thinks there will not be a definitive rate cut in 2026, which is a bad sign for risk assets.
So, what’s next for the markets?
Today, the FOMC interest rate decision and Powell's press conference will take place, and I believe it is going to be aggressive.
This is because the main concern of the Federal Reserve has been inflation lately, and despite the increases and tightening, the Federal Reserve has not been able to control that.
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