TLDR
- The Fed’s preferred inflation measure, core PCE, likely rose to 2.9% in September, marking the 55th straight month above the Fed’s 2% target
- Bitcoin’s implied volatility index shows no major disruptions at 36%, suggesting traders expect only a 1.88% price swing in 24 hours
- A softer inflation report could push the 10-year Treasury yield below 4% and help Bitcoin break out of its $92,000-$94,000 trading range
- Stock futures traded flat on Thursday night with the Dow and S&P 500 near flatline while Nasdaq 100 futures rose 0.1%
- Markets price in an 87% probability of a quarter-point Fed rate cut on December 10, regardless of PCE data
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Stock futures and cryptocurrency markets showed little movement on Thursday night as traders waited for Friday’s inflation report. The data could influence the Federal Reserve’s next policy decision.
Contracts tied to the Dow Jones Industrial Average and S&P 500 stayed near flatline. Nasdaq 100 futures rose 0.1% in overnight trading.
The core Personal Consumption Expenditures index is expected to show a 2.9% year-over-year increase for September. This would mark the 55th consecutive month of inflation above the Fed’s 2% target.
The report arrives ahead of the Fed’s December 10 rate decision. Markets currently price in an 87% chance of a quarter-point rate cut next week.
Despite inflation concerns, cryptocurrency volatility remains low. Bitcoin’s implied volatility index sits around 36%, suggesting traders expect a 1.88% price swing over 24 hours.
Bitcoin has been trading in a range between $92,000 and $94,000 for two days. A softer inflation report could push the 10-year Treasury yield below 4%.
This move in yields could help Bitcoin break out of its current range. Nexo Dispatch analyst Iliya Kalchev said contained PCE data would support crypto’s rebound.
Alternative Cryptocurrencies Show Higher Volatility
Ethereum’s one-day implied volatility index stood at 57.23%, implying a 3% price swing. This is higher than Bitcoin’s expected movement.
Solana’s volatility index signals a 3.86% price move. XRP shows the highest expected volatility at 4.3%.
ING analysts warned that any decline in Treasury yields could be short-lived. The impact would likely be similar across different cryptocurrencies.
Thursday’s stock market session ended mixed. The S&P 500 and Nasdaq posted modest gains, with the tech-heavy index marking its eighth positive close in nine days.
Meta climbed 3.4% while Nvidia rose 2.1%. These tech stocks helped lift the broader index.
Friday will bring delayed September figures on personal spending and income. The University of Michigan will also release its December consumer sentiment reading.
Thursday’s jobless claims data showed new filings fell to their lowest level since September 2022. This suggests the labor market is cooling gradually rather than rapidly.
A separate report from Challenger, Gray & Christmas showed 71,000 job cuts in November. This was the worst November data since 2022.
Fed funds futures reflect strong expectations for rate cuts. The probability of a move next Wednesday jumped sharply from earlier in the month.
CME’s FedWatch tool treats a 25 basis point cut on December 10 as nearly certain. Low volatility expectations stem from anticipated Fed action regardless of PCE data.
