The Fed’s preferred inflation gauge, the core PCE, likely rose in September, moving in the wrong direction. However, volatility indices show no signs of major turbulence.
Core PCE likely rose 2.9% year over year in September, in the wrong direction from the Federal Reserve’s target of a 2% annual rate, according to FactSet. If the actual figure matches estimates, it would mark 55 consecutive months of inflation above the Federal Reserve’s 2% target. Persistent inflation would strengthen Federal Reserve hawks, who favor slower rate cuts.
Still, at the time of writing, Volmex’s one-day annualized bitcoin implied volatility index, BVIV, was hovering in familiar ranges around 36%, according to data source TradingView. That equates to an expected 24-hour price swing of 1.88%, which is nothing out of the ordinary.
Low volatility expectations likely stem from the Fed’s expected rate cuts next week, regardless of the PCE data. CME’s FedWatch tool rates a 25 basis point cut on December 10 as a done deal.
A weaker-than-expected report could send the 10-year Treasury yield below 4%, helping BTC break out of its two-day trading range of $92,000-$94,000.
“A softer labor reading and a subdued PCE would reinforce the easing narrative underpinning the crypto bounce, while any bullish surprise may keep markets range-bound until the Federal Reserve clears its path,” Nexo Dispatch analyst Iliya Kalchev said in an email.
ING analysts, however, have warned that any decline in the benchmark performance could be short-lived.
The data could have a similar impact on alternative cryptocurrencies.
Speaking of ether, its one-day implied volatility index was 57.23%, implying a 3% price swing in 24 hours, slightly higher than that of bitcoin. Meanwhile, the SOL Volatility Index indicates a price movement of 3.86%, with XRP at 4.3%.
