The most significant event of the week was the ceasefire agreement with Iran. Moreover, substantial tariff-related announcements were made, indicating China’s signing of an agreement. A slew of agreements is expected to be announced next week. On the macroeconomic front, all eyes were on the recently released Personal Consumption Expenditures (PCE) data. The Federal Reserve’s interest rate strategy will be determined by the inflation outlook.
Inflation Data Insights
The PCE data, a key indicator closely monitored by the Federal Reserve for inflation trends, showed a 0.1% increase from the previous month’s 2.5%, reaching 2.6%. Various Fed members have made numerous statements in the past ten days concerning tariffs’ impact on inflation. The extent and nature of tariffs remaining in effect are unclear, with more definitive information expected by early July. The existing 10% baseline tariff effects have been visible in data since April.
- U.S. Core PCE Announced: 2.7% (Expected: 2.6%, Previous: 2.5%)
- U.S. PCE Announced: 2.3% (Expected: 2.3%, Previous: 2.1%)
Despite positive sentiment spurred by the China agreement, the unexpected rise in core PCE caused some disappointment. However, the increase remains within a moderate range of 0.1% to 0.2% monthly.
Market Reactions and Future Prospects
Following the mildly unfavorable data, Bitcoin 
$78,323 understandably dipped below $107,000. Positive ongoing statements regarding tariffs and potential supportive comments from Trump about reducing inflation could offset today’s data’s negativity. As long as closures above $105,600 continue, a hopeful outlook will persist.
Investors anticipate the Fed will begin interest rate cuts in September and predict three such reductions in 2025. These anticipated actions reflect expectations of adapting to evolving economic conditions.
