BlockBeats reported on Aug. 26 that Bitunix said global assets are facing repricing pressure as the U.S. economy shows a split picture of cooling demand and still-sticky inflation.
In the U.S., consumer confidence has fallen to its lowest level this year, while July new home sales dropped to a six-month low. Elevated mortgage rates continue to weigh on housing demand. At the same time, Federal Reserve officials have not backed away from their inflation concerns.
Fed officials keep focus on inflation
Susan Collins said policy may need to tighten "soon" if there is no clear evidence that inflation is continuing to move lower. Thomas Barkin warned that as debt keeps accumulating, a "day of reckoning" could eventually emerge if investors stop absorbing U.S. Treasurys.
Bitunix also noted that 4 of the 12 regional Federal Reserve banks supported a higher discount rate in July, a sign that debate inside the Fed over how restrictive policy should be is heating up. That leaves the July PCE release later today in sharper focus.
July PCE is the immediate market test
Market expectations call for core PCE to hold at 3.3% year over year, with a 0.2% month-over-month increase. If the reading comes in above expectations, it could reinforce the case for keeping rates high in September or even raising them.
For now, markets still see a pause in September as the more likely outcome. The larger question, according to the analysis, is whether tariffs, energy costs and AI infrastructure spending are creating a new layer of inflation stickiness.
Bitunix added that the PCE methodology will undergo a major adjustment at the end of September. That could lead to revisions in later data and make inflation trends harder to interpret.
Japan and Australia add to global bond-market strain
Outside the U.S., inflation and rate-hike expectations are rising together in Japan, adding more pressure to global bond markets. In Australia, July core inflation also came in above expectations, increasing the risk of another rate hike from the Reserve Bank of Australia.
In Bitunix's view, the backdrop facing central banks is not simply weak demand. Growth is slowing, but structural inflation, fiscal deficits and energy costs are still limiting room for rate cuts.
Higher funding costs could weigh on richly valued assets
The analysis said AI investment remains an important support for global growth. Still, if longer-dated U.S. Treasury yields rise, Japanese capital flows back home and global policy rates stay elevated at the same time, higher funding costs could put pressure on richly valued assets such as equities and crypto.