ChainCatcher News, the U.S. will announce the Federal Reserve's preferred inflation indicator tonight------the Personal Consumption Expenditures Price Index (PCE). The market expects that the PCE price index for April may only increase by 0.1% month-on-month, while the year-on-year growth rate is expected to drop from 2.3% to 2.2%, approaching pre-pandemic levels.On the core side, the month-on-month growth rate of the core PCE, which excludes the volatility of food and energy prices, is expected to be 0.1%, but the year-on-year growth rate will remain high at 2.6%. Currently, the importance of the PCE lies in the fact that the Federal Reserve prefers to use it to measure the underlying trends in inflation.Analysts point out that the inflation effects of the tariffs imposed by the Trump administration have just begun to permeate the U.S. economy. Most economists predict that even if Trump relaxes some tariffs, inflation may rebound to 3% in a few months. With the U.S. core PCE stuck in the 2.8%-2.6% range for six consecutive months, the Federal Reserve's window for rate cuts is closing.Although some Federal Reserve officials still hold a positive attitude towards rate cuts, the interest rate futures market shows that traders' predictions for the probability of a rate cut in September have plummeted from 68% a week ago to 47%. They also expect that the U.S. economy is at a crossroads of a new inflation cycle.

ChainCatcher news, according to Jinshi Data, Saira Malik, head of Nuveen Equities and Fixed Income, stated that the overall impact of the tariffs announced so far this year on U.S. real GDP growth could be around negative 1.7%.In a report, Malik mentioned that the tariffs will also cause core PCE to rise by 2.0% this year, a data point favored by the Federal Reserve as an inflation gauge. The latest data for February was 2.8%. Given that the tariffs announced so far have exceeded expectations, Nuveen believes the risks lean towards further rate cuts by the Federal Reserve.Malik stated, "Our probability-weighted guidance has increased from four rate cuts by the Federal Reserve in 2025 and 2026 to 6.6 rate cuts, while our fair value assessment for the 10-year U.S. Treasury yield has decreased from 4.5% to 4.0%."

ChainCatcher news, according to Jinshi reports, "the Federal Reserve's mouthpiece" Nick Timiraos stated that the Federal Reserve's favored inflation indicator, the Personal Consumption Expenditures Index (PCE), showed an increase of 2.2% over the 12 months ending in August, not far from the Federal Reserve's 2% target.A year ago and two years ago, this indicator was 3.4% and 6.6%, respectively. The core PCE (excluding the more volatile food and energy items) rose by 2.7% year-on-year in August. A year ago, the 12-month core inflation rate was 3.8%, and two years ago it was 5.4%.