U.S. PCE Inflation Data and Federal Reserve Rate Forecast
The U.S. released critical inflation data for November, showing a mixed outlook that continues to influence Federal Reserve policy:
- PCE Price Index (Month-over-Month): +0.1% (expected +0.2%, prior +0.2%)
- PCE Price Index (Year-over-Year): +2.4% (expected +2.5%, prior +2.3%)
- Core PCE (Year-over-Year): +2.8% (expected +2.9%, prior +2.8%)
These figures underscore a moderation in inflation, albeit at a slower pace than expected. Following the data, markets continued to anticipate a pause in Federal Reserve rate adjustments in January. However, futures markets have shifted, now pricing in a rate cut in March and an additional reduction by October.
BBG Williams, a Federal Reserve representative, commented, "The baseline trajectory suggests further rate cuts based on evolving data."
Bitcoin Corrects to $95,000 Amid Record ETF Outflows
Bitcoin’s price saw a significant correction, dropping to $95,000 on December 19. According to data from
SoSoValue, a record $680 million outflow from spot Bitcoin ETFs was recorded on the same day, marking the largest daily outflow to date. This sell-off raises concerns about market stability and investor sentiment, hinting at a potential cooling period after Bitcoin’s rapid ascent earlier in the year.
U.S. Investigation Targets Nvidia and Supermicro
In a high-stakes development, the United States has initiated an investigation into Nvidia ($NVDA) and Supermicro ($SMCI) regarding how their chips found their way to China despite export restrictions.
The Information reports that the investigation aims to uncover potential violations of U.S. trade policies. The outcome could have significant implications for both companies, especially as U.S.-China tensions intensify in the tech sector.
Tesla’s Stock Decline Continues
Tesla’s ($TSLA) shares fell 5% on December 20, extending a decline amid a broader market reassessment following the end of the post-election rally.
CNBC reported that the drop reflects investor concerns about the company’s ability to sustain its valuation amid shifting market conditions. Tesla’s recent performance remains under scrutiny as it faces mounting challenges in the electric vehicle sector.
Conclusion: A Dynamic Economic Landscape
Recent data and developments underscore the intricate dynamics shaping the market. The U.S. inflation report and Federal Reserve outlook provide critical guidance for future monetary policy. Meanwhile, Bitcoin’s correction and record ETF outflows highlight ongoing volatility in the cryptocurrency market. The Nvidia and Supermicro investigation adds another layer of complexity to U.S.-China relations, and Tesla’s continued stock decline signals investor caution.
As 2024 draws to a close, these events set the stage for a challenging yet opportunity-filled 2025 for investors and policymakers alike.
Works Cited
