The Fed’s preferred inflation gauge, core PCE, likely rose in September – moving in the wrong direction. Still, volatility indices show no signs of major turbulence.
Core PCE likely rose 2.9% year-on-year in September, heading in the wrong direction from the Fed’s target of a 2% annual rate, according to FactSet. If the actual number matches estimates, it will mark 55 straight months of inflation above the Fed’s 2% target. Sticky inflation would bolster Fed hawks who favor slower rate cuts.
Still, as of writing, Volmex’s annualized one-day bitcoin implied volatility index, BVIV, hovered in familiar ranges around 36%, according to data source TradingView. That equates to a 24-hour expected price swing of 1.88%, which is nothing out of the ordinary.
Low volatility expectations likely stem from expected rate cuts from the Fed next week regardless of PCE data. CME’s FedWatch tool is pricing a 25 basis point cut on Dec. 10 as a done deal.
A softer-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 read and contained PCE would reinforce the easing narrative supporting crypto’s recovery, while any upside surprise could keep markets tied down until the Fed clarifies its path,” Iliya Kalchev, Nexo Dispatch analyst, said in an email.
However, analysts at ING have warned that any drop in the benchmark rate could be short-lived.
The data may have a similar impact on alternative cryptocurrencies.
Speaking of ether, the one-day implied volatility index was 57.23%, implying a 24-hour price swing of 3%, slightly higher than bitcoin. Meanwhile, SOL’s Volatility Index signals a price move of 3.86%, with XRP at 4.3%.
