April PCE Inflation Holds at 3.8%, Keeping Crypto on Edge Ahead of a Likely Fed Pause
April's Personal Consumption Expenditures (PCE) inflation—the Federal Reserve's preferred gauge—came in at 3.8% year over year, matching forecasts and marking the hottest reading since May 2023. Core PCE, which strips out food and energy, rose 3.3% from a year earlier, also in line with expectations and the highest since October 2023—nearly double the Fed's 2% target.
The month-to-month data were softer. Core PCE increased 0.2% in April, below the 0.3% estimate and slower than the prior month. The Bureau of Economic Analysis report also showed personal income was flat, missing the 0.4% consensus, while consumer spending rose 0.5%.
Additional U.S. data leaned mixed: initial jobless claims were 215,000 versus 211,000 expected, and preliminary Q1 GDP was revised down to 1.6% (consensus 2.0%).
Crypto prices eased after the release, with Bitcoin trading near $73,404, down 2.89% over the past 24 hours, for a market capitalization of about $1.47 trillion. The move follows recent pressure on BTC after hawkish remarks from Fed Governor Christopher Waller.
Rate expectations remained firmly anchored to a "higher for longer" outlook. CME FedWatch showed a 98.9% probability the Fed holds rates at 3.50% to 3.75% at the June 17 meeting, with just 1.1% pricing a quarter-point cut.
Persistent inflation has helped support a stronger U.S. dollar and weighed on non-yielding assets. The Kobeissi Letter characterized the PCE figures as a setback for the easing camp, while Allianz chief economic adviser Mohamed El-Erian said the broader set of releases largely matched consensus and was unlikely to materially change the prevailing economic narrative or current market levels.
Looking ahead, forward markets are pricing few cuts through the rest of 2026. Recent rises in Treasury yields and the dollar have also dented demand for Bitcoin and gold. Traders are now focused on upcoming nonfarm payrolls and the May CPI report as the next major catalysts that could reshape rate-cut probabilities heading into the second half of 2026.
