US equities edge higher, cryptocurrencies slip as inflation cools, market reacts to debate

Prices in May increased at the lowest annual rate in more than three years, the personal consumption expenditures price index showed Friday.

Core PCE, which excludes volatile food and energy prices, came in at 2.6% higher from a year ago. It’s the lowest increase since 2021.

Overall PCE was unchanged between April and May, while the core figure increased 0.1%. The readings are in line with analyst expectations.

Markets seem to have reacted to the print well. US equities trended higher Friday morning following a boost in futures late Thursday evening as the first presidential debate wrapped. The S&P 500 and Nasdaq Composite indexes were up 0.3% each at time of publication.

Fed fund futures showed renewed hope that the Federal Reserve will begin the rate cutting cycle in September, with markets showing a 60% likelihood, according to data from CME Group.

“Should inflation continue to behave itself, and incoming data fall in line with the [Federal Open Market Committee]’s forecasts through the summer, the first 25 [basis point] cut remains on the cards as soon as September,” Michael Brown, senior research strategist at Pepperstone, said. “This is particularly true if cracks emerging in the labor market, such as yesterday’s continuing jobless claims print rising to its highest level since November 2021, were to result in a significant rise in unemployment, and/or a negative nonfarm payrolls print, before said meeting.”

Bitcoin and ether slipped on Friday afternoon in New York, losing 1.4% and 1%, respectively, at time of publication. Both cryptocurrencies bounced late Thursday night as President Joe Biden and former President Donald Trump faced off. Bitcoin gained as much as 1.1% during the broadcast, while ether ticked 1.5% higher.

Crypto analysts remain focused on the status of spot ether ETFs in the US. Prospective issuers are working through the revision process for their S-1 forms with the Securities and Exchange Commission, which could be the final step before the products start trading.

Start your day with top crypto insights from David Canellis and Katherine Ross. Subscribe to the Empire newsletter.

Explore the growing intersection between crypto, macroeconomics, policy and finance with Ben Strack, Casey Wagner and Felix Jauvin. Subscribe to the On the Margin newsletter.

The Lightspeed newsletter is all things Solana, in your inbox, every day. Subscribe to daily Solana news from Jack Kubinec and Jeff Albus.