Tonight's September PCE data, in my view, is a ballast in the current chaotic market. Global liquidity seems to have one foot on the gas (the U.S. may cut interest rates) and one foot on the brakes (Japan is certain to raise interest rates). This rare policy divergence has caused the market to lose direction in the short term.

Therefore, the significance of tonight's data lies in confirming which way the U.S. foot is actually stepping. Currently, the market bets that the probability of a December rate cut by the Federal Reserve is as high as about 87%. So, the core logic for tonight is very simple: as long as the data does not exceed expectations, significantly higher than the expected 2.9%, it will pave the way for the Federal Reserve's rate cut decision. This will offset some of the panic caused by Japan's interest rate hike, providing underlying liquidity support for risk assets.

In terms of short-term impact, one must be wary of volatility from expectations being fulfilled. If the data meets or falls below expectations, one must guard against short-term selling pressure from positive news being fully priced in; if unexpectedly strong, it may reinforce tightening concerns and exacerbate declines. However, in the face of the larger narrative of U.S. rate cuts, any short-term declines caused by data could become an opportunity for mid-term positioning.

In summary, don't let a single piece of data lead you by the nose. Understanding the broader picture of U.S.-Japan monetary policy is essential to holding onto your positions. Follow Lao Chen and penetrate the fog. #美联储重启降息步伐