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Highlights
- The US PPI comes in hotter-than-anticipated at 3% in November.
- The recent surge marks the largest increase since February 2023.
- The Core PPI also accelerates to 3.4% as compared to market expectations of 3.2%.
Investors eagerly awaited the crucial US Producer Price Index (PPI) data, especially after the recent CPI inflation accelerated last month. Notably, the latest data showed that the US PPI accelerates at 3%, up from the 2.4% figure noted in October. The surge also exceeded market forecasts, dampening the hopes of the crypto market enthusiasts. Besides, it also sparked concerns regarding the anticipated Fed rate cut at the upcoming FOMC next week.
US PPI Inflation Comes In At 3% In November
The latest Labor Department data showed that the US PPI accelerated at 3% in November, up from 2.4% noted in the prior month. It marks the largest increase since February 2023, exceeding market forecasts of 2.6%. On a monthly basis, the headline inflation comes in at 0.4%, as compared to market estimates and the prior month’s figure of 0.2%.
On the other hand, the Core PPI, which excludes food and energy prices, saw an increase of 3.4%, as compared to 3.1% in October. It also tops the market forecast of a 3.2% surge. On a monthly basis, the Core PPI comes in at 0.2% in November, in line with the market expectations and down from 0.3% noted in the prior month.
This hotter-than-anticipated figure appears to have weighed on the traders’ sentiment. Besides, it also sparked concerns over a potential hawkish move by the US Federal Reserve at their next week’s gathering. Notably, the market was previously betting towards a potential 25 bps Fed rate cut announcement next week.
Meanwhile, this comes just after the latest US CPI inflation figures also showed a spike yesterday. However, the US CPI figures were in line with the market expectations, which has cemented bets towards a potential 25 bps Fed rate cut at next week’s FOMC.
What’s Next For Crypto Market?
The massive spike in the US PPI inflation figures has fueled concerns among investors over a pause in Fed rate cut next week. This also dampens hope in the broader financial sector, let alone the crypto market. For context, if the central bank decides to keep its rate higher, it might weigh on the traders’ sentiment and create a barrier for the investors to enter the sector.
Notably, following the release, the US 10-year Bond Yield rose 0.23% to 4.282. Simultaneously, the US Dollar Index also advanced 0.02% to $106.365. However, despite the spike in inflation, the CME FedWatch Tool still showed a 98% chance of a potential 25 bps rate cut at the Fed’s upcoming gathering.
Meanwhile, the crypto market also continued its rally after the release. The global crypto market cap surged more than 3.2% to $3.64 trillion. Simultaneously, Bitcoin and other top altcoins have also rallied following the release.
Having said that, it appears that the investors’ sentiment remains strong despite the soaring inflationary pressures. Now, the market participants will keep a close track at the upcoming FOMC next week, for cues on the Fed’s upcoming stance with their rate cut plans.
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