[DigitalToday reporter Yoonseo Lee (이윤서)] The U.S. personal consumption expenditures (PCE) inflation rate for April rose 3.8 percent from a year earlier, the highest since May 2023.

On May 28 local time, blockchain media outlet BeInCrypto reported that bitcoin (BTC) weakened after the data, sliding to around $73,300.

The reading matched market forecasts but remained far above the Federal Reserve's 2 percent target. Core PCE, excluding volatile food and energy, rose 3.3 percent year-on-year, also in line with forecasts. That was the highest since October 2023.

Monthly trends were mixed. Core PCE rose 0.2 percent in April, below the 0.3 percent forecast. But with annual inflation pressure still high, markets paid more attention to the chance the Fed's higher-for-longer stance would persist.

Other U.S. data released the same day were also mixed. Personal income was flat from the previous month, below the market forecast for a 0.4 percent increase, while consumer spending rose 0.5 percent. Initial jobless claims were 215,000, slightly above the 211,000 forecast. First-quarter gross domestic product growth was revised down to 1.6 percent.

The crypto market reacted more sensitively to the possibility of changes in the rate path than to the inflation data. Bitcoin was trading around $73,404, down 2.89 percent over 24 hours after the release, and its market capitalisation was estimated at about $1.47 trillion. The pattern was similar to the correction seen after hawkish remarks by Fed Governor Christopher Waller.

Rate expectations also added to market pressure. CME FedWatch showed a 98.9 percent chance the Fed will hold its benchmark rate in a 3.50 to 3.75 percent range on June 17. The probability of a 0.25 percentage point cut was 1.1 percent. Markets have already priced in a higher-for-longer scenario for weeks, but the latest data reaffirmed that trend.

Market analysis firm The Kobeissi Letter assessed the data as an unfavourable signal for expectations of easing. It said, "April PCE inflation was 3.8 percent, the highest since May 2023, and core PCE was 3.3 percent, the highest since October 2023," adding that "the Fed's key inflation gauge is almost double the target."

Mohamed El-Erian (모하메드 엘 에리언), Allianz's chief economic adviser, put more weight on the overall mix of indicators. He said, "These U.S. economic indicators largely match market expectations overall," and added that "these figures will not significantly change the market's base scenario or current market levels."

In this situation, markets expect the total amount of rate cuts for the rest of this year will not be large. Rising U.S. Treasury yields and a stronger dollar are pressuring demand for both bitcoin and gold. Assets that do not generate interest, such as bitcoin, can become relatively disadvantaged the longer rates stay high.

Markets are now looking to the next jobs data and the May consumer price index (CPI). The Fed's rate path in the second half could be adjusted again depending on forthcoming inflation and employment indicators. Follow-up data are expected to determine whether April PCE signalled an inflation peak or reaffirmed persistent inflation.

INTEL: US JOBLESS CLAIMS 215K IN MAY 23 WEEK; EST. 211K US PRELIM Q1 GDP +1.6% (CONSENSUS +2.0%) US APRIL PCE PRICE INDEX RISES 0.4% M/M; EST. +0.5% US APRIL PCE PRICE INDEX RISES 3.8% Y/Y; EST. +3.8%