US PCE Inflation Rises to 2.9% Beating Estimates; Bitcoin and Risk Assets Under Pressure

U.S. PCE inflation, the Federal Reserve's preferred price gauge, rose to 2.9% year-on-year, surpassing market expectations. The unexpected uptick in inflationary pressure triggered an immediate sell-off in Bitcoin and other risk-sensitive assets. Analysts suggest that these figures strengthen the case for the Federal Reserve to maintain high interest rates for a more extended period. The prospect of delayed rate cuts has bolstered the U.S. Dollar (DXY) while increasing the opportunity cost for non-yielding assets. Bitcoin experienced a notable decline following the data release as investors recalibrated their expectations for monetary easing. This data underscores the persistent nature of inflation, complicating the Fed's path toward a potential policy pivot in the near term.