PCE Data, Jobless Claims Test Fed's Rate Path: Crypto Week Ahead
0h ago|4 min readStandard
Fazen Markets Editorial Desk
Collective editorial team · methodology
PCEFederal Reserve
Fazen Markets Editorial Desk
Collective editorial team · methodology
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The path for Federal Reserve interest rate cuts faces a critical test from a trio of U.S. economic data releases during the week starting May 25, 2026. Core PCE inflation data, along with initial jobless claims and housing market figures, will provide the latest snapshot of economic strength and price pressures. The data will directly influence expectations for monetary policy easing, a primary driver for risk assets including cryptocurrencies. Markets currently assign a 68% probability to a 25-basis-point Fed rate cut by the July meeting, based on CME FedWatch Tool data as of May 24, 2026. Coindesk reported on May 25, 2026, that this data slate will challenge recent optimism for policy loosening.
The Federal Reserve held its benchmark rate steady at 4.50-4.75% during its May meeting, maintaining a wait-and-see stance. The last significant dovish pivot occurred in late 2024 when the Fed initiated its cutting cycle after inflation receded from 2023 highs. Chair Jerome Powell has consistently stated that future decisions are data-dependent, requiring sustained progress on inflation toward the 2% target. The April 2026 Consumer Price Index report showed a concerning uptick, with core CPI rising 0.4% month-over-month, an annualized pace inconsistent with the Fed's goal. This elevated the stakes for the PCE report, the Fed's preferred inflation gauge, as markets seek confirmation that April's CPI was an anomaly. Strong employment data has also tempered cut expectations, with the April nonfarm payrolls addition of 253,000 jobs exceeding forecasts.
The median forecast from Bloomberg economists projects the April core PCE Price Index rose 0.2% month-over-month and 2.7% year-over-year. This compares to the March 2026 reading of 0.3% MoM and 2.8% YoY. A result matching or exceeding the 0.3% MoM pace would signal stalled disinflation. Initial jobless claims for the week ending May 24 are expected at 215,000, near the historically low 212,000 recorded the prior week. Sustained claims below 220,000 indicate a resilient labor market. Pending home sales data for April is forecast to show a 0.8% monthly decline. The 10-year U.S. Treasury yield traded at 4.31% on May 24, reflecting market indecision ahead of the releases.
| Metric | Consensus Forecast | Prior Reading | Date of Release |
|---|---|---|---|
| Core PCE (MoM) | +0.2% | +0.3% | Thu, May 29 |
| Core PCE (YoY) | 2.7% | 2.8% | Thu, May 29 |
| Initial Jobless Claims | 215K | 212K | Thu, May 29 |
| Pending Home Sales (MoM) | -0.8% | +3.5% | Thu, May 29 |
Bitcoin traded near $81,500, a 15% decline from its 2026 high of $96,000 in March. The Bloomberg U.S. Aggregate Bond Index has returned -1.2% year-to-date, under pressure from shifting rate expectations.
A hotter-than-expected core PCE print, particularly above 0.3% MoM, would trigger a sell-off in rate-sensitive assets. The immediate losers would be long-duration tech stocks like Nasdaq 100 components NVIDIA (NVDA) and Tesla (TSLA), which could see declines of 3-5%. Bitcoin and Ethereum would likely follow equities lower, with support for Bitcoin near $78,000. Treasury yields would spike, with the 2-year note potentially breaching 4.60%. A counter-argument is that the market has already priced in a hawkish pause, limiting downside. However, a clean 0.2% or lower PCE reading would validate the disinflation narrative. This would boost risk assets, with crypto proxies like MicroStrategy (MSTR) and Coinbase (COIN) leading gains. Flow data from Fazen Markets shows institutional money market funds saw $42 billion in inflows over the past month, indicating cash is waiting on the sidelines for a clearer signal. Positioning in CME Bitcoin futures shows a slight lean toward short positions among leveraged funds.
The immediate focus shifts to the Federal Open Market Committee meeting on June 18. The committee will update its Summary of Economic Projections, including the dot plot of rate expectations. Any shift in the median 2026 dot will drive significant market repricing. The May jobs report on June 6 will provide the next major labor market signal. Key technical levels for Bitcoin include major support at the 100-day moving average near $77,800 and resistance at $85,000. For the 10-year Treasury yield, a break above 4.40% would target the 2026 high of 4.55%, while a drop below 4.20% could signal a return to the April low of 4.08%. The ISM Manufacturing PMI on June 2 will offer an early read on Q2 economic momentum.
The Personal Consumption Expenditures Price Index, the Fed's preferred gauge, uses a different formula and basket than the Consumer Price Index. PCE covers a broader range of expenditures, including healthcare costs paid by employers and governments, and uses a chain-weighting methodology that updates basket weights more frequently. These differences generally make PCE less volatile than CPI. Historically, core PCE runs about 0.3-0.4 percentage points below core CPI, as seen in April 2026 when core CPI was 3.1% YoY versus core PCE at 2.8%.
A delayed Fed cutting cycle typically strengthens the U.S. dollar, making dollar-denominated assets like Bitcoin more expensive for international buyers. Higher-for-longer rates also increase the opportunity cost of holding non-yielding assets like cryptocurrencies. Historical analysis shows Bitcoin's 60-day correlation with the Nasdaq 100 strengthens in periods of monetary policy uncertainty, as both are treated as risk assets. During the 2023 rate hike cycle, Bitcoin underperformed gold when real yields rose sharply.
Initial jobless claims provide a high-frequency, real-time read on labor market health, unlike the monthly jobs report. The Fed has emphasized that labor market softening is a prerequisite for cutting rates to ensure inflation's decline is sustainable. Claims remaining below 220,000 signal tight conditions that empower workers and support wage growth, which can feed into services inflation. The four-week moving average of claims, currently 217,750, is a key metric for identifying a trend change.
The week's data will determine whether market optimism for mid-year Fed rate cuts is justified or premature.
Disclaimer: This article is for informational purposes only and does not constitute investment advice. CFD trading carries high risk of capital loss.
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