- US PPI is expected to rise 0.6% monthly, while core PPI is forecast to increase 0.3%.
- Hotter producer inflation could raise Fed rate-hike expectations and pressure Bitcoin.
- PPI components may offer clues about the Fed’s preferred PCE inflation measure.
The US Bureau of Labor Statistics (BLS) is expected to release the latest Producer Price Index (PPI) data today. This report could influence expectations for the Federal Reserve’s interest rate decision on October 28, especially as it comes after the hotter-than-expected consumer index data. Now, investors are waiting to see if the producer prices also give a similar picture.
US PPI Data Expected Today
The PPI report is set to release today, revealing the changes in the prices that businesses receive for their goods and services. The measure shows whether the production costs are rising or falling. As per economists’ expectations, the latest PPI report is likely to show a 0.6% monthly increase. The core PPI is also projected to grow by 0.3%.
How Could US PPI Data Impact Bitcoin and Fed Rate-Hike Odds?
Importantly, the PPI figures could influence expectations for the Fed rate decisions. If the data reveals a hotter-than-expected reading, it may increase inflationary pressure, forcing the central bank to push the rate higher. According to the CME FedWatch reading, the odds of an October rate hike are at 33.8%.
Bitcoin can also feel the pressure if inflation fears rise. As people may become more cautious about risk assets, crypto may face increased selling pressure. On the other hand, a weaker-than-expected reading may act as a positive catalyst for Bitcoin. In such a situation, the Fed may take a dovish stance, supporting the crypto market.
US PPI Report Follows Hotter-Than-Expected CPI Data
It is worth noting that the PPI report follows the release of the US Consumer Price Index (CPI) on October 14. Reportedly, consumer prices rose 0.6% in September. This brought the annual inflation to 3.7%, up from the previous month’s 3.4%. Core CPI also surged 0.3% in a month, and 2.6% in a year.
CPI vs. PPI: What Is the Difference?
While discussing the influence of the upcoming PPI data on the crypto market, it is important to distinguish between CPI and PPI reports. Basically, the CPI data includes the changes in prices consumers pay for goods and services. PPI is all about changes in the prices businesses receive for their goods and services.
CPI indicates how inflation affects households. At the same time, PPI gives a picture of price pressures at the production level. When businesses face high costs, they may put the same pressure on customers, imposing high charges. However, both reports help investors understand the direction of inflation.
What to Watch Now?
One of the key things to watch is today’s PPI report. When fuel prices rise, businesses face more expense on production and transportation. Some may pass these extra costs on to customers. This could keep inflation high.
Another important thing is US Treasury yields. If the PPI report comes in higher than expected, yields could rise as investors prepare for higher interest rates. Investors may also check CME FedWatch data to know estimates on the Fed rate decisions.
Will Bitcoin Price Rise or Fall After the US PPI Report?
Interestingly, Bitcoin’s future direction depends on the upcoming PPI report. If the figure rises more than the expected 0.6%, inflation could remain high, and the central bank may take a hawkish stance. This could spark negative sentiment across the crypto market, affecting Bitcoin and other cryptocurrencies.
On the other hand, if the report shows a smaller increase than expected, it may ease inflation concerns. Thus, the Federal Reserve may not increase rates, creating a favorable condition for Bitcoin.
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Significantly, the PPI report can also give some ideas about the Personal Consumption Expenditures (PCE) price index. It refers to the Fed’s preferred measure of inflation. Some PPI components are used to estimate prices for goods and services in the PCE report.
For instance, producer-price data for healthcare services, portfolio management, and other services could help calculate certain PCE categories. If these prices surge, they could lead to higher measured PCE inflation. But it is important to mention that the relationship is not direct.
Related: U.S. CPI Could Hit 3.6%, Yet Softer Core Inflation May Spark BTC and ETH Rebound
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