MARKET COMPASS
- On Thursday, Trump confirmed that his proposed 25% tariffs on Mexico and Canada will go into effect on March 4 and that an additional 10% tariff will be imposed on goods imported from China
- With Trump’s statements, sales in risky assets, including digital assets, deepened
- The dollar maintained its global gains amid tariff concerns, while the yield on the US 10-year bond continued to decline, indicating investors’ risk aversion
- Asian stock markets are down this morning. Futures contracts of European stock markets with large economies are negative. Wall Street futures point to a flat to negative opening.
In global markets, Trump’s new statements on tariffs supported the risk-off sentiment. The news flow on the issue will continue to be influential on asset prices. In addition, macro indicators that will provide information about the health of the US economy will be closely monitored both in terms of economic stagnation and in terms of predicting the next policy step of the US Federal Reserve (FED). Today, the PCE Price Index, which is used as a measure of inflation by the FED, will be under scrutiny.
We expect to see a weak recovery in digital asset prices after the recent losses. However, it should be underlined that the markets are highly sensitive to news flows and pricing behavior is more sensitive to new statements that may come from the Trump front at any time. We maintain our expectation of volatility in the short term, pressure in the medium term and bullishness in the long term.
FED’s Inflation Indicator: PCE
US Federal Reserve Chairman Powell’s speech at the Jackson Hole Symposium last year led to a significant shift in the equation. Powell shifted the focus from inflation to the strength of the labor market and gave messages that the FED would now give more importance to the strength of the labor market in its decisions. Or at least that is how the markets interpreted the statements. Recent months have shown that this may not be the right approach.
In January, the Consumer Price Index (CPI) came in at 3% on an annualized basis. In September, with a reading of 2.4%, it pointed to the lowest inflation increase since February 2021. So this CPI from September points to faster increases. In this regard, we can say that the FED has followed a path that can be criticized. On the other hand, the core PCE Price index (annualized), which the FED considers to monitor changes in inflation, has been unchanged (2.8%) for the last three months (October-November-December). The monthly data for this indicator had pointed to an increase of 0.2% in December. We think that this is the data that will be important for the markets today.
Source: Bloomberg
Some items of the Producer Price Index (PPI), which constitute some components of the PCE data, drew attention as the PPI data released on February 13th came in above the forecasts. However, the change in retail sales for the same month (January data), which is also calculated by monthly change, indicated that spending in the country declined faster than expected. In other words, we can say that we watched two macro data in the previous week that made PCE forecasting difficult.
According to Bloomberg, Core PCE Price Index (m/m) data is expected to point to a 0.3% rise in January. A higher-than-median forecast may support expectations that the Fed will maintain its cautious stance on interest rate cuts , reducing risk appetite and weighing on digital assets. A lower-than-expected data, on the other hand, may have the opposite effect and pave the way for value gains.
HIGHLIGHTS OF THE DAY
Important Economic Calender Data
| Time | News | Expectation | Previous |
|---|---|---|---|
| – | XRP (XRP) – 40 Million Token Unlock | – | – |
| – | Optimism (OP) – 31.34 Million Token Unlock | – | – |
| – | Movement (MOVE) – Movement Mainnet launch | – | – |
| – | SingularityNET (AGIX) – Future Day 2025 conference | – | – |
| 13:30 | US Core PCE Price Index (MoM) (Jan) | 0.3% | 0.2% |
| 13:30 | US Core PCE Price Index (YoY) (Jan) | 2.6% | 2.8% |
| 13:30 | US PCE Price Index (MoM) (Jan) | 0.3% | 0.3% |
| 13:30 | US PCE Price Index (YoY) (Jan) | 2.5% | 2.6% |
| 14:45 | US Chicago PMI (Feb) | 40.5 | 39.5 |
INFORMATION:
*The calendar is based on UTC (Coordinated Universal Time) time zone.
The economic calendar content on the relevant page is obtained from reliable news and data providers. The news in the economic calendar content, the date and time of the announcement of the news, possible changes in the previous, expectations and announced figures are made by the data provider institutions. Darkex cannot be held responsible for possible changes that may arise from similar situations.
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