PCE Inflation Surpasses Expectations, Raising Fed Rate Hike Odds

On August 26, the U.S. Bureau of Economic Analysis released July PCE inflation data showing the overall index increased by 0.2% month-over-month and 3.7% year-over-year. Core PCE also rose by 0.2% and 3.3%, respectively. These figures remain above the Federal Reserve's target levels, fueling expectations of an interest rate hike at the upcoming September FOMC meeting. Following the data release, market probabilities of a rate increase rose from 36% to between 40% and 44%. In response, Bitcoin's price dipped below $78,000, and the U.S. dollar strengthened. Meanwhile, institutional ETFs saw continued capital inflows, with Bitcoin ETFs attracting +$314.3 million, Ethereum ETFs +$179.8 million, and Solana ETFs +$32.2 million on August 25. This marks the seventh consecutive positive session for Bitcoin and Ethereum ETFs, indicating sustained institutional interest.