BlockBeats report, on August 26, the U.S. economy exhibited a contradictory situation of “cooling demand and persistently high inflation.” U.S. consumer confidence fell to its lowest point this year, and new home sales in July dropped to a six-month low, as high mortgage rates continue to suppress housing demand; however, Federal Reserve officials remain vigilant about inflation. Collins stated that without evidence of sustained inflation decline, policy may need to be tightened “as soon as possible.” Barkin warned that as debt continues to accumulate, a “清算时刻” — a moment when investors stop absorbing U.S. Treasuries — could eventually occur. Additionally, four of the 12 regional Fed banks supported raising the discount rate in July, reflecting growing internal debate within the Fed over the extent of policy restraint.
The July PCE data released tonight is therefore particularly critical. Markets expect the annual core PCE inflation rate to remain at 3.3% and monthly growth at 0.2%. If the data exceeds expectations, it could further strengthen the likelihood of maintaining high rates—or even raising them—in September. However, the market still assigns a higher probability to a hold in September; what truly matters is whether inflation is developing new persistence due to tariffs, energy costs, and AI infrastructure expenses. Notably, the PCE methodology will undergo a major revision at the end of September, potentially leading to retrospective adjustments and making it more difficult for markets to interpret inflation trends going forward.
Abroad, inflation and interest rate hike expectations in Japan are rising in tandem, further pressuring global bond markets; Australia’s July core inflation also exceeded expectations, increasing the risk of another RBA rate hike. This indicates that global central banks are not merely facing weak demand, but rather an economic slowdown accompanied by persistent structural inflation, fiscal deficits, and high energy costs that constrain room for rate cuts. AI investment remains a key driver of global growth, but if elevated long-term U.S. Treasury yields, capital repatriation from Japan, and high global policy rates persist simultaneously, rising funding costs could ultimately exert pressure on high-valued assets such as equities and cryptocurrencies.