Following a comprehensive cooling of the April CPI, the Federal Reserve’s favorite inflation indicator, the core PCE price index, hit a three-year low.
Last Friday, the latest data from the US Department of Commerce showed that the year-on-year growth rate of the core PCE price index in April, excluding food and energy, was 2.8%, in line with expectations of 2.8%, with the previous value revised up to 2.82%. The month-on-month growth rate of the core PCE in April was 0.2%, slightly below expectations and the previous value of 0.3%, marking the lowest monthly increase so far this year. After the data was released, US stocks initially rose before falling again.
The GDP data released last Thursday also supported expectations of interest rate cuts. The actual GDP annualized quarterly growth rate for the first quarter in the US was 1.3%, down 0.3 percentage points from the initial value of 1.6%, and significantly slower than the 3.4% growth rate in the fourth quarter of last year.
The positive data did not lead to a general rise in US stocks. On the contrary, technology stocks generally fell. This was mainly because funds were leaving high positions and looking for market lows, which were found in undervalued traditional companies. Since the beginning of this year, the Dow Jones Industrial Average, which has a relatively large proportion of traditional companies, has only seen a 1.2% increase, far behind the S&P 500 and the Nasdaq. Since hitting a new high of 40,000 points on May 17, the Dow has fallen by nearly 5%, showing the largest oversold level since September 2022. We need to pay attention to the impact of this style shift on the cryptocurrency market in the future.
Within the industry, there have been continuous positive developments. One is that BlackRock has submitted a revised S-1 statement, with an Ethereum spot ETF expected to launch at the end of June. This positive development will be the main theme for the foreseeable future.
The second development is that David Bailey, CEO of Bitcoin Magazine and cryptocurrency assistant to the Trump campaign team, revealed that Trump had inquired about using Bitcoin to address the US national debt issue. This news confirms the high-level US interest in cryptocurrencies. In the short term, this is favorable for the RWA track, and in the long term, if Trump comes to power, there may be even greater positive developments.