Following the Federal Reserve’s recent interest rate hike two weeks ago, an upcoming slate of five data releases will determine whether another increase occurs in October.
Although the Fed’s chair emphasizes that isolated figures should not dictate policy, market traders continue to price their next moves based on this week’s incoming information.
The Fed Raised Rates and Refused to Signal Its Next Move
On September 16, the central bank adjusted its benchmark rate to a range spanning 3.75% to 4%, noting in its policy statement that inflation “remains elevated.”
Back in June, BeInCrypto reported that Bank of America anticipated three Fed rate hikes throughout the year, kicking off in September.
During his press conference, Chair Kevin Warsh declined to commit to a subsequent rate increase.
“Trends matter. Data points are noisy. Data point dependence is a dangerous preoccupation.”
Interest rate traders are currently pricing in roughly a 64% probability of another hike taking place on October 28.
Because higher rates increase the payouts on savings accounts and government bonds, capital tends to shift away from speculative assets such as technology equities and Bitcoin (BTC). According to BeInCrypto data, Bitcoin currently changes hands near $84,728.
1. Monday, Bank of Japan Minutes
According to its official calendar, the Bank of Japan (BOJ) is set to release the minutes from its July 30–31 policy meeting on Monday morning, Japan time.
These minutes offer a written account of board members’ debates between rate adjustments. The BOJ previously lifted its rate to approximately 1% in June before moving it to about 1.25% on September 18.
The central bank’s September statement confirmed that it “will continue to raise the policy interest rate.” With Japanese rates sitting more than 2.5 percentage points lower than the Fed’s, any indications of accelerated tightening in Tokyo could narrow this differential and send shockwaves through global bond markets.
Assets in play. Japanese government bonds, the yen, US Treasury yields, and Bitcoin.
2. Wednesday, PCE Inflation
The Personal Consumption Expenditures (PCE) index serves as the primary inflation gauge monitored by the Fed while also measuring consumer spending patterns. Its “core” variation strips out volatile energy and food costs.
Data from the Bureau of Economic Analysis (BEA) revealed that core PCE advanced 3.3% for the 12 months leading up to July. Forecasts project August’s figure at 3.4%, well above the Fed’s 2% objective.
Consumer spending is anticipated to expand by 0.5% in August, which would mark the steepest monthly acceleration in over a year.
Assets in play. Treasury yields, the US dollar, the S&P 500, the Nasdaq, and Bitcoin.
3. Wednesday, GDP
On that same morning, the BEA will issue its third and final review of second-quarter economic output via Gross Domestic Product (GDP) metrics.
BEA figures indicated that the prior estimate placed annualized growth at 1.5%, cooling from the 2.1% pace recorded during the first quarter. An upward revision would provide the Fed with additional justification to maintain elevated interest rates.
Assets in play. Treasury yields, the US dollar, and the S&P 500.
4. Thursday, ISM Manufacturing Index
Each month, the Institute for Supply Management (ISM) polls purchasing managers within the manufacturing sector. Any reading surpassing 50 signals expansion.
ISM reported that August’s index settled at 54.6, down from July’s level of 55.6, while the underlying prices metric remained at 71.1, indicating that factories continue to face rising input costs.
Assets in play. Industrial stocks, Treasury yields, the US dollar, and oil.
5. Friday, Payrolls
The trading week concludes with the release of the September jobs report. Analysts project roughly 90,000 newly created positions, reflecting a slowdown from August’s 162,000 figure, while the unemployment rate is expected to hold steady at 4.1%.
Bureau of Labor Statistics records show that hourly wages increased by 0.3% in August. A robust employment update would underline economic resilience and fortify arguments for further monetary tightening.
BeInCrypto previously reported that Bitcoin rallied following the soft employment data released in June.
Assets in play. Treasury yields, the US dollar, the S&P 500, the Nasdaq, gold, and Bitcoin.
What the Week Means for Treasury Yields
Collectively, these economic updates will inform the Fed’s upcoming decision scheduled for October 27 to 28, while also dictating the trajectory of US Treasury yields—the yields paid by the government on its borrowings.
BeInCrypto noted that the 10-year yield recently pulled back from a 19-year peak. By Friday evening, policymakers will have access to all necessary data points, though whether they choose to act on them remains the question Kevin Warsh has opted not to address.
Frequently Asked Questions
Why are this week’s economic data releases important for stocks and crypto?
These five data releases will provide insight into inflation, consumer spending, economic growth, manufacturing, and employment, helping traders gauge whether the Federal Reserve will raise interest rates again at its October meeting. Higher interest rates typically draw capital away from risk-on assets like tech stocks and Bitcoin.
What is the market expecting from the upcoming PCE inflation report?
August’s core PCE inflation is forecast to rise to 3.4% year-over-year, remaining well above the Federal Reserve’s target of 2%. Consumer spending is also expected to climb by 0.5% for the month.
How does the Bank of Japan minutes release affect global markets?
The minutes from the Bank of Japan‘s July meeting could reveal hints about future rate hikes. Because Japanese interest rates remain significantly lower than U.S. rates, any indication of faster tightening in Tokyo could narrow the interest rate gap and send ripples through global bond markets and assets like Bitcoin and U.S. Treasuries.
