24.02 was an important day in macroeconomic terms. 16.30 US PCE data was released. Due to the recent slowdown in the rate of decline in inflation and the low unemployment rate, the markets had been focused on the PCE data since the beginning of the week. PCE, the personal consumption expenditure index, is one of the favorite indicators of the FED (Federal Reserve Bank of America).
Core PCE prices in the US, which exclude food and energy, jumped by 0.6% month-over-month in January of 2023, the most since August, following an upwardly revised 0.4% increase in the previous month and above market estimates of 0.4%. The annual rate, the Federal Reserveâs preferred gauge to measure inflation, rose by 4.7% and surpassed market expectations of 4.3%, backing signals from Fed policymakers that interest rates must be higher for longer to tame unsustainable price growth. Meanwhile, the headline figure rose by 0.6% from the previous month, the most since June and the annual rate accelerated to 5.4% from 5.3%.
Then new home sales were announced. We saw that new sales came in above expectations. All these data are actually not what the FED wants. There is only 1 month left until the interest rate hike meeting in March. Markets started to price the possibility of 3 interest rate hikes.
After all these developments, we have seen decrease of risk appetite in both traditional financial markets and cryptocurrency markets. Currently, Bitcoin is trading at USD 23,000.
