Yesterday's PCE data showed a MoM of 0.4%, which was within expectations. The market has already priced in the hot CPI and PPI data, causing a decrease in bond yield. However, this doesn't mean inflation is over. A 0.4% increase over 12 months equates to 4.8% inflation. Will it cool down? We'll need to wait for the CPI data on 03/12.
invest strategy:
- hold stock until 03/12.
Btc, an attention-driven business, will peak in an economic ease cycle before declining. Eventually, it'll reach an attention limit, lose public interest, and fare worse than gold.
Despite high inflation expectations, Treasury bond yields are declining, possibly due to risk aversion-driven demand before PCE release. This is evident as the stock market drops and short-term yields rise back today, while long-term yields still fall.
TLT price ~= Treasury yield change
example: US 20-year treasury yield change from 4.4% to 4.3%,
- treasury yield change : 4.4 - 4.3 = 0.1, change =0.1/4.4 = 2.27%
- TLT price change ~= 2.27%