US PPI report to test Bitcoin, gold and Nasdaq as December rate hike looms

The US Producer Price Index (PPI) report is set for release on Friday, November 13, presenting another major test for inflation expectations as investors in Bitcoin, gold, and equities brace for increased volatility. This data comes at a crucial moment, with financial markets already responding to higher Treasury yields and prospects of further monetary tightening from the Federal Reserve.

Focus on October inflation data

Economists are projecting a 0.4% rise in producer prices for October, after a notable 1.3% increase in September, which marked the largest monthly gain since March 2022. The core PPI, which excludes volatile food and energy costs, is expected to climb 0.3%, down from the previous 0.7% rise. The Bureau of Labor Statistics, the US government agency responsible for official labor market and price data, will publish the report at 8:30 a.m. Eastern Time.

On an annual basis, producer inflation is anticipated to edge up to 6.6%, with core prices excluding food and energy expected to remain elevated. The recent September reading showed headline producer inflation at 6.3% year over year, while core prices increased 5%. The upcoming figures follow an October consumer inflation report that showed a 0.4% monthly gain in the CPI, leading analysts and traders to expect further tightening measures from the central bank.

Mini dictionary: Bureau of Labor Statistics – A US government agency that collects and analyzes economic data, focusing on labor market activity, price changes and productivity.

US money markets have recently priced in an 88% probability of a quarter-point interest rate increase by the Federal Reserve in December, with some expectations even leaning toward a 50-basis-point hike.

Bitcoin and gold in the spotlight

Bitcoin has already dropped below $70,000 amid signs of leveraged selling, increased institutional outflows, and tightening financial conditions that have dampened appetite for riskier assets. A previous warning over more than $50 billion in Bitcoin futures exposure sparked renewed fears of a larger market selloff, fueling ongoing volatility.

Analysts suggest that if the PPI reading comes in hotter than expected, expectations for higher interest rates will likely intensify, exerting downward pressure on Bitcoin by strengthening the US dollar and curbing speculative investments. Ethereum has also faced challenges, with outflows from exchange-traded funds (ETFs) reaching $144.8 million in recent sessions.

Gold has similarly struggled despite ongoing geopolitical tensions, recently falling below $3,900 as rising Treasury yields raised the opportunity cost of holding non-yielding assets like bullion. Softer producer inflation numbers could, however, offer some temporary relief by easing expectations for near-term rate hikes.

If producer inflation surprises on the upside, both Bitcoin and gold could face renewed selling in the face of stronger dollar demand and rising rates.

Technology stocks brace for volatility

Major US technology stocks are also exposed to Friday’s inflation figures. The Nasdaq has seen increased volatility in recent weeks following a leadership crisis at Nvidia, one of the largest semiconductor and artificial intelligence companies. This spike in uncertainty has weighed on AI-related stocks and broader tech valuations.

Rising yields put additional pressure on growth-oriented sectors, since higher rates reduce the present value of future earnings and make it more expensive for tech firms to finance infrastructure projects. For companies focused on artificial intelligence and cloud computing, the tightening financial environment increases challenges in sustaining rapid growth.

Investors remain cautious as Wall Street’s recovery faces persistent inflation threats. The outcome of Friday’s PPI report could influence expectations for Federal Reserve policy decisions and set the tone for asset markets in the months ahead.