Wall Street banks have raised expectations for another strong U.S. inflation reading ahead of Thursday’s Personal Consumption Expenditures report, a release closely watched by crypto and equity traders for clues on future Federal Reserve policy.
Summary
- JPMorgan, Goldman Sachs, BofA, Morgan Stanley, and UBS expect U.S. headline PCE inflation to rise 3.8% year-over-year in April.
- Core PCE inflation is projected between 0.27% and 0.30% month-over-month as traders watch for clues on future Fed rate decisions.
- Bitcoin and broader crypto markets remained under pressure ahead of the PCE release, while rising Treasury yields and a stronger U.S. dollar weighed on risk assets.
According to forecasts from JPMorgan, Goldman Sachs, Bank of America, Morgan Stanley, and UBS, headline U.S. PCE inflation likely rose 3.8% year-over-year in April. The estimates come as Bitcoin, Ethereum, stocks, and gold remain under pressure from rising Treasury yields and a stronger U.S. dollar.
The U.S. Bureau of Economic Analysis is scheduled to publish the April PCE inflation report alongside the second estimate of first-quarter 2026 GDP and corporate profits. Investors are also tracking April new home sales data, which arrives the same day and could influence expectations around consumer demand and borrowing conditions.
JPMorgan said risks remain tilted toward higher inflation after recent increases in oil prices and goods-related costs. The bank estimated monthly core PCE inflation at 0.25%, slightly below the previous 0.3% reading, while still warning that core inflation could stay elevated through 2026.
At the same time, Bank of America, Goldman Sachs, Morgan Stanley, and UBS projected headline PCE inflation between 0.43% and 0.45% month-over-month. Those banks also estimated core PCE inflation in a range between 0.27% and 0.30% for April.
Wall Street banks expect inflation pressure to persist
Separate forecasts compiled by economists place core PCE inflation at 3.3% year-over-year, up from 3.2% in March. Headline PCE inflation is also expected to rise from 3.5% to 3.8%, despite monthly headline inflation likely easing to 0.5% from 0.7%.
Adding to those expectations, Wall Street Journal reporter Nick Timiraos said economists estimate April core PCE inflation rose 0.28% based on prior CPI and PPI data. Timiraos noted that such a reading would push the six-month annualized core inflation rate to 3.8%, its highest level in roughly three years.
Federal Reserve officials have continued to stress inflation risks even as markets debate whether the central bank may eventually resume rate hikes. Minneapolis Fed President Neel Kashkari recently said inflation remains too high despite a still-resilient labor market.
Meanwhile, traders are also preparing for the possibility that incoming Fed Chair Kevin Warsh could support tighter monetary policy early in his tenure. Data from the CME FedWatch Tool currently shows more than 40% odds of a 25 basis point rate increase by December.
Bitcoin and crypto traders brace for market volatility
Ahead of the inflation release, crypto markets have struggled to regain momentum after a sharp selloff earlier this week. Bitcoin briefly dropped to $72,659 before recovering above $73,000, while Ethereum and XRP also traded lower alongside U.S. equities.
According to market participants, hotter-than-expected inflation could strengthen the U.S. dollar further and keep Treasury yields elevated, conditions that have historically pressured speculative assets including cryptocurrencies.
On the other hand, softer inflation data may revive expectations for easier monetary policy later this year. Traders have said such an outcome could support renewed buying in Bitcoin and Ethereum after several sessions of heavy liquidation across digital asset markets.
Outside inflation, Thursday’s GDP revision and housing market figures may also affect investor sentiment. Economists said stronger GDP and home sales numbers could support the Federal Reserve’s higher-for-longer stance on interest rates, while weaker readings may revive concerns about slowing economic growth and recession risks.
