U.S. November Core PPI Surpasses Expectations, Cryptocurrency Market Faces Dual Pressure from Inflation and Policy

U.S. November Core PPI Year-over-Year Reaches 3%, Surpassing Market Expectations of 2.7%. This 0.3 percentage point surprise may seem small, but it reflects that inflationary pressures have not eased as gently as the market anticipated. Against the backdrop of uncertain Federal Reserve policy outlook and rising geopolitical risks, this data brings new considerations to the crypto market.

What Does the PPI Surprise Mean

Inflationary pressures still exist

Core PPI excludes energy and food price fluctuations, providing a better reflection of the true inflation trend in the economy. November data shows that cost pressures on the production side remain, deviating from the market’s previous optimistic expectations of a quick Fed rate cut.

According to related news, softening U.S. labor market data had previously boosted expectations for more aggressive rate cuts by the Fed. However, the PPI surprise indicates that although employment has slowed, the costs of goods and services production have not significantly decreased, creating new constraints on the Fed’s policy space.

Fed Faces Dilemma

Related news shows that Fed Chair Powell, who bases rate decisions on economic assessments rather than political will, is under criminal investigation. This unprecedented event reflects the current political pressure faced by the Fed. With inflation data exceeding expectations, the room for rate cuts is further compressed, and policy uncertainty has risen markedly.

Market Chain Reaction

Dollar and Gold Dynamics

After the PPI data release, market expectations for Fed policy adjusted accordingly. Related news indicates that after Powell was “attacked,” the dollar index quickly fell, while international gold prices surged. This reflects market concerns over the Fed’s independence and the credibility of the dollar.

Gold prices have already broken through the $4,600 mark, hitting a record high. Analysts point out that after softening labor market data, expectations for more aggressive Fed rate cuts heated up, serving as a key driving factor. However, the PPI surprise disrupted this expectation, further boosting gold’s safe-haven appeal.

Pressures and Opportunities for Crypto Assets

Key Variables to Watch

• U.S. December CPI Data: Will further confirm inflation trends and be crucial for Fed policy direction
• Fed Policy Statements: Under dual pressures of inflation and politics, Fed statements will determine market direction
• Geopolitical Risks: Rising geopolitical risks may continue to boost safe-haven demand, benefiting gold but suppressing risk assets
• Crypto Regulatory Progress: Progress of the CFTC innovation committee’s work will directly impact the policy environment for crypto markets

Summary

The PPI surprise indicates that inflationary pressures have not fully subsided, constraining the Fed’s policy space. Amid political pressure and rising policy uncertainty, markets are reassessing the attractiveness of risk assets. In the short term, the crypto market faces pressure from a strong dollar and declining risk appetite, but in the long term, improvements in regulation and on-chain financial infrastructure provide support. The key is to closely monitor subsequent Fed signals and inflation data trends.