#USMayPCEInflationRisesTo4.1%HighestIn3Years

🌡️ The May PCE number is out. It is 4.1%. This is a deal because it is the Federal Reserves favorite way to measure inflation. This number is now at a 3 year high. It is affecting every type of investment that involves risk.

This new information came out today. It is more important than people think it is right now. I want to explain why the PCE number being at 4.1% changes the picture of the economy for the second half of 2026.

The Personal Consumption Expenditures price index, which is the way the Federal Reserve measures inflation went up 4.1% from year to this year in May. This is the highest it has been in over three years. The core PCE number, which does not include food and energy is 3.4%. This is higher than the Federal Reserves goal of 2%. Both of these numbers are higher than people thought they would be. They both show that the problem of inflation is not getting better and is actually getting worse.

The reason the PCE number is more important than the CPI number for people who invest is simple. The Federal Reserve uses the PCE number to make decisions about money. Jerome Powell always talked about the PCE number. Kevin Warsh, who just had his meeting as the head of the Federal Reserve is known for being tough on inflation. When the PCE number is at a 3 year in his first month as the head it will be very hard for him to ignore.

This is having an painful effect on the crypto market. The chance of interest rates going up in 2026 was already over 40% after the CPI number came out at 4.2%. The PPI number came out at 5.2% earlier this month. The new PCE number shows that this is not a one time thing. It is a trend. We have had three inflation reports in a row that were all higher than expected. The market now has to think about the possibility that the next thing the Federal Reserve will do's raise interest rates not lower them.

The price of Bitcoin is $59,792 today. The price of Ethereum is $1,567. The Fear and Greed index is at 13, which's Extreme Fear. There is an options expiry happening today that is worth $10.5 billion and the most painful price for it would be $74,000. The fact that the PCE number came out on the day as the biggest options expiry of the year is making the market very volatile.

One good thing in the data is that the GDP for the first quarter of the year was revised upward to 2.1% from 1.6%. This means that the economy is not doing badly. This is a problem with inflation, not a problem with the economy being in a recession. This is important because it means the Federal Reserve has room to act without making the economy worse.

For investments that involve risk the message is clear. An inflation rate of 4.1% PCE means that interest rates will be higher for longer. Higher interest rates for longer means that it will cost more to hold investments like Bitcoin that do not earn interest. Until the PCE number starts to go down to 3% or lower the problem for crypto will still be there.

The situation with Iran is a card. If energy prices go down because the conflict is really over that would be the way to make the PCE number go down. Today an Iranian ship attacked a ship from Singapore in the Strait of Hormuz which is testing the ceasefire agreement from week. This means that the extra cost of energy because of the conflict is not going away.

We need to be patient and protect our money. We need to watch the data.

With the PCE number at a 3 year high of 4.1% on the day, as a $10.5 billion Bitcoin options expiry do you think today is the last day of the market going down before it recovers or will the inflation data keep crypto down for the whole summer?

#USMayPCEInflationRisesTo4.1%HighestIn3Years #GateSquare #MacroCrypto