After the U.S. Federal Reserve (Fed) announced a sharp 50 basis point interest rate cut last week, the U.S. authorities released the August personal consumption expenditures (PCE) report last night (27th). Data showed that the U.S. PCE in August increased by 0.1% compared with July. It was in line with expectations and lower than the 0.2% increase in July; the annual increase was 2.2%, lower than the expected 2.3%, and significantly lower than the 2.5% increase in July.
At the same time, core PCE rose 0.1% month-on-month, lower than expected and July's 0.2%, while the annual increase was 2.7%, a slight increase from July's 2.6%, but in line with expectations.
Fed’s mouthpiece: PCE indicator is not far from the Fed’s target
Overall, the U.S. PCE data for August showed that inflation is further under control. Wall Street reporter Nick Timiraos, known as the "Fed's mouthpiece," also said that the inflation status shown by the PCE data is not far from the Fed's goal. Got:
Data from PCE, the Fed's preferred inflation gauge, showed that in the 12 months to August, PCE inflation rose 2.2%, not far from the Fed's 2% target.
You know, one year ago and two years ago, this indicator was 3.4% and 6.6% respectively.
Low interest rates do not guarantee a soft landing for the U.S. economy
The latest PCE data also hinted that further interest rate cuts by the Federal Reserve are possible, but Nick later pointed out that low interest rates cannot guarantee a soft landing for the U.S. economy, and interest rate cuts still pose risks:
Lower interest rates do not guarantee a soft landing, although they certainly offer the prospect of a soft landing for the economy. But the problem is that the average cost of debt is probably still rising, and the marginal cost of debt is probably falling as the Fed cuts spending.
For some households and businesses, higher interest rates do not necessarily translate into higher borrowing costs, and borrowers may simply choose not to borrow. The large amount of low-interest-rate, fixed-maturity debt may weaken the transmission effect of tightening policy, and if the economy needs looser policies, these buffers may also weaken the transmission of loose policies.
Top traders: have reduced some positions
Faced with the current uncertainty, top trader Eugene Ng Ah Sio also posted on Twitter yesterday (27th) that he had already reduced his position:
I trimmed some positions and tried to stick to the plan despite the FOMO going around.
As for the market's view, Eugene posted on September 25 that he would not pursue more profits as the market rose. He said that Bitcoin would not exceed $70,000 before the U.S. election, so he Will wait for market correction before re-entering:
By the way, my ramblings do not mean that I will pursue more profits as the market rises. In my opinion, $65,000 to $68,000 is a reasonable range for early buyers to take profits. Many Wait-and-see funds are also catching the last train at $65,000, but this may also be the final upward momentum.
I don’t think Bitcoin will break $70,000 before the election, so I won’t choose to add to my position. On the contrary, if $68,000 is hit, I would prefer to wait until the market drops to around $60,000 to enter again.
The market predicts that the probability of a 2% rate cut in November is 56.7%
In addition, according to the CME Group's Fed Watch tool, the current market forecast is that the probability of the Fed cutting interest rates by 2 percentage points in November is 56.7%, while the probability of cutting interest rates by 1 percentage point is 43.3%, which also reflects some of the market's concerns about the U.S. economic outlook. .
