Unexpected Expansion in US Manufacturing PMI, June Rate Cut Probability Drops Below 50%, Risk Assets such as Bitcoin Respond with Decline

Unexpected Expansion in US Manufacturing PMI, June Rate Cut Probability Drops Below 50%, Risk Assets such as Bitcoin Respond with Decline

Unexpected Expansion in US Manufacturing PMI, June Rate Cut Probability Drops Below 50%, Risk Assets such as Bitcoin Respond with Decline

According to data released today, the Purchasing Managers’ Index (PMI) for the US manufacturing sector exceeded market expectations, rising by 2.5 to 50.3 in March. This marks the first expansion since November 2022, halting the 16 consecutive months of contraction.

The strengthening of manufacturing activity may indicate an expansion of the overall US economy and is seen by the Federal Reserve as a strong signal of economic strength, which may affect their expectations for future economic prospects. Generally, if the PMI exceeds expectations, the Federal Reserve is more likely to lean towards maintaining the current interest rate policy or considering rate hikes, especially if other economic indicators support a trend of economic growth and rising inflation.

Data from FedWatch shows that market expectations for a rate cut in June were once below 50%, but at the time of writing this article, it has risen to 57%, indicating that market confidence in a rate cut by the Federal Reserve in June seems to be wavering.

Following the news, the US Dollar Index maintained its strong momentum, with an intraday gain of nearly 0.5%, while the three major US stock indices declined after the market opened. Meanwhile, cryptocurrencies such as Bitcoin were not spared, with Bitcoin falling below $69,000 in the evening and Ether falling below $3,500.

(This article is authorized for reposting from GT Radar)

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