The US Personal Consumption Expenditures Price Index (PCE) for April, which was released as expected, shows that although inflation has not worsened, inflationary pressures remain strong. In response to this, Nansen’s chief analyst warns that the longer we stay in a high-interest rate environment, the greater the downside risks.
Yesterday evening, the US Federal Reserve (Fed) released the Personal Consumption Expenditures Price Index (PCE), which is an inflation indicator of interest to the Fed. The data shows that in April, the overall PCE increased by 0.3% compared to the previous month and increased by 2.7% compared to the previous year, remaining steady. In addition, the core PCE increased by 0.2% in April, lower than the 0.3% increase in March, also in line with expectations.
Although the year-on-year growth rate of 2.8% has remained steady for three consecutive months, slightly higher than the expected 2.7%, it indicates that inflation has not continued to worsen. After the data was released, the four major US stock indexes had mixed reactions. The Dow Jones and S&P 500 indexes rose by 1.51% and 0.8% respectively, while the Nasdaq and Philadelphia Semiconductor Index fell by 0.01% and 0.96% respectively.
Nansen analyst: The market has already priced in the expectation of two interest rate cuts by the Fed in 2024
In response to this, Aurelie Barthere, chief research analyst at Nansen, pointed out that inflationary pressures remain strong and that the current market has already anticipated the Fed’s two interest rate cuts this year. Therefore, she warns that the longer we stay in a high-interest rate environment, the greater the downside risks.
She also pointed out that a slowdown in economic growth is unfavorable for cryptocurrencies and warned investors to pay attention to signs of weak economic growth, despite their strategic optimism in the current cryptocurrency market.
Bitcoin ETF fails to gain widespread support from financial advisors
On the other hand, despite attracting nearly $13.86 billion in inflows since its listing, CNBC reported that the acceptance of cryptocurrency products among financial advisors is still relatively low. Many advisors are taking a wait-and-see approach to Bitcoin ETFs, and the main factors affecting their adoption are “market timing” and “regulatory compliance”. Ted Jenkin, founder and CEO of Atlanta-based oXYGen Financial, stated:
In addition, some large financial institutions, such as Vanguard (the world’s second-largest asset management giant), have yet to express trust in Bitcoin ETFs, which also affects the adoption rate among advisors. It remains to be seen whether Bitcoin ETFs can further penetrate the market of traditional investors as time passes and regulations become clearer.
Related reports:
– Serious differences of opinion at the Federal Reserve on “interest rate cuts this year”! Some officials call for “conditional rate hikes” to curb inflation.
– Fed Beige Book: Moderate inflation growth and pessimistic economic outlook; Fed officials call for Q4 rate cuts.
– UBS: Don’t be afraid of the hawkish Fed meeting minutes, still predicting a 50 basis point rate cut by the Fed this year.