Family, the global market is waiting for an answer! The US September PCE data, to be released on Friday, is the Federal Reserve's most favored inflation indicator, directly becoming the 'life and death judge' of the year-end market — after all, with non-farm data delayed and soft data contradictions, only this hard data can set the tone for next week's interest rate cut!
First, let's look at the current situation: The US stock market has just climbed back to historical highs after turbulence, but the contradiction between low consumer confidence and sticky inflation has left investors in a panic; although the probability of the Federal Reserve cutting interest rates in December is as high as 87%, without PCE backing it, no one dares to be certain that Powell won't change his mind. What’s more challenging is that the ADP employment data plummeted by 32,000, while corporate earnings reports showed strong consumption; this 'divided signal' can only be resolved by the PCE!
The market's expectations for the data are very clear: economists predict a 0.3% month-on-month PCE for September overall, and 0.2% core, with year-on-year rates of 2.9% and 2.8%, respectively. If the data comes in below expectations, even just 0.1 points low, it will be seen as solid evidence of cooling inflation—U.S. stocks are likely to rally into the end of the year, and gold could break free from the $4170 fluctuation, pushing towards $4300; but if the data exceeds expectations, the probability of interest rate cuts will plummet, U.S. stocks might adjust, gold could fall below $4100, and even the cryptocurrency market would suffer, with BTC possibly giving back recent gains.
Institutions have long prepared their positions: Nationwide emphasizes that the PCE is the 'only reliable guide', while Natixis reminds that the Federal Reserve may 'ignore lagging inflation and prioritize employment'; there is no consensus on Wall Street, as some bet on favorable data to continue increasing positions, while others reduce positions in advance to guard against black swans. More importantly, this data will also affect carry trades, the dollar's movement, and even the pace of the Bank of Japan's interest rate hikes, making it a situation where 'pulling one thread affects the whole world'!
The entire market is holding its breath for tonight's results, as this is not only the 'last piece of the puzzle' for the Federal Reserve's decision but also the key to whether we can earn with peace of mind by the end of the year. For us, whether it's stock trading, hoarding gold, or holding cash, we must closely monitor the first wave of fluctuations after the data release and not be caught off guard by the market movements.
