Last (20) night, the US Department of Commerce released the November Personal Consumption Expenditures (PCE) Price Index. The data showed that the overall PCE price index in the US rose 0.1% month-on-month in November, lower than the previous market expectation and the prior value of 0.2%; the year-on-year increase was 2.4%, slightly higher than the previous 2.3%, but lower than the market expectation of 2.5%.
In addition, the US core PCE index rose 0.1% month-on-month in November, lower than the expected 0.2% and the prior 0.3%; the year-on-year increase was 2.8%, the same as the prior value but lower than the market expectation of 2.9%. Overall, the US November PCE index was lower than expected across the board, suggesting that inflation is under control, and the financial website Forexlive also gave an assessment:
Estimates based on the Consumer Price Index and other data show that the PCE index rose 2.4% year-on-year in the 12 months through November, while the core PCE rose 2.8% year-on-year. This is an unexpectedly broad-based cooling report, with the US dollar being sold off and bonds rebounding.
Fed Official: Interest Rates May Decline Significantly in the Next 12 to 18 Months
After the release of the PCE report, US Federal Reserve official Goolsbee predicted that interest rates could decline significantly in the next 12 to 18 months:
Inflation is still expected to reach the Fed's 2% target, and today's data shows that the recent surge in inflation was just a bump in the road. My forecast is that the interest rate path in 2025 will be slightly lower.
Over the next 12 to 18 months, interest rates could decline significantly, as the current policy rate is restrictive, and the policy rate is still far from the neutral rate.
In addition, another Fed official, Williams, also stated that the recent data is consistent with the Fed's forecast, the economy is in good shape but the growth rate is expected to slow to 2% next year.
US Stocks Rally
Due to the fact that the Fed announced a 25 basis point rate cut on the 19th, while also indicating that the pace of rate cuts next year is expected to slow from 4 to 2, this triggered a sell-off in the stock and cryptocurrency markets.
However, after the release of the PCE report last night, the US stock market gave a positive response, with the four major indices all rising:
- Dow Jones Industrial Average: up 0.92%, or 391.59 points, to 42,749.87 points
- S&P 500 Index: up 0.85%, or 49.98 points, to 5,917.06 points
- Nasdaq Composite: up 0.81%, or 155.67 points, to 19,528.44 points
- Philadelphia Semiconductor Index: up 1.69%, or 82.62 points, to 4,976.45 points
Bitcoin V-Shaped Recovery
The cryptocurrency market has also seen a rebound, with Bitcoin surging from around $92,268 to over $97,000 around 8:15 PM last night, and currently trading at $96,980, with the 24-hour decline narrowing to 3.24%.
In addition, Altcoins such as Ethereum have also seen a rebound, with the top 10 cryptocurrencies seeing their declines narrowed after the PCE report. ETH has returned above $3,300, and SOL has also broken above $190.
