Economist Mohamed El-Erian believes the PCE inflation data expected to be released by the Federal Reserve on Thursday will have a unique effect on investors’ interpretation of the metric. In his latest post on X, El-Erian stated that analysts would focus more on how stale the numbers have become rather than concentrating on the actual figures.
Typically, traders and investors compare the released data to projections, questioning whether the headline and core figures are higher or lower than what is expected. El-Erian thinks market dynamics have changed, leaving participants to interpret the figures differently.
Notably, the consensus forecast is for the May headline inflation to edge higher from 0.4% to 0.5%, with the annual rate rising from 3.8% to 4.1%. Meanwhile, the monthly core rate is expected to increase to 0.3% from 0.2%, while the annual core rate is forecasted at 3.4%, from 3.3%.
Technical traders consider the PCE figures the Federal Reserve’s most critical inflation indicator. Economist Kamile Uray believes Thursday’s figures could trigger a direct response from Bitcoin and the stock market.
(adsbygoogle = window.adsbygoogle || []).push({});According to her, Bitcoin and the stock market could benefit if Core PCE comes in below the expected 3.4%, as easing inflationary pressure would strengthen expectations for Federal Reserve rate cuts. In that scenario, assets such as Bitcoin, the Nasdaq, and gold could react positively.
On the other hand, Uray noted that a reading above expectations could reinforce expectations that the Fed will keep interest rates elevated for longer. Such an outcome could strengthen the dollar and bond yields while putting selling pressure on Bitcoin, gold, and stocks.
Both El-Erian and Uray highlighted the recent spike in oil prices triggered by the tensions with Iran, noting that the market is pricing in some risk of a higher-than-expected reading. In the meantime, TradingView’s data shows a notable decline in Bitcoin’s price, with the cryptocurrency dropping to $61,860 on Tuesday, reflecting a 3.45% loss before rebounding slightly on Wednesday morning to trade for $62,719 at the time of writing.
