On June 25, 2026, the US Bureau of Economic Analysis released the Personal Consumption Expenditures (PCE) Price Index for May. The data showed that overall PCE prices rose 4.1% year-over-year in May, up from the previous 3.8%, marking the first time since April 2023 that inflation broke above the 4% threshold and reaching the highest level in more than three years. Excluding food and energy, core PCE climbed 3.4% year-over-year, slightly higher than the previous 3.3%, hitting a new peak since October 2023. On a month-over-month basis, overall PCE increased 0.4%, while core PCE held steady at 0.3%.
The key feature of this data is that it’s "in line with expectations, but stubborn in direction." The market’s median forecast for May core PCE year-over-year was 3.4%, and for overall PCE, 4.1%. The actual readings matched Wall Street expectations almost exactly. However, this "in line with expectations" result didn’t calm the market—in fact, inflation is climbing slowly but surely, rather than retreating toward the Federal Reserve’s 2% target.
Even more noteworthy are the structural signals. The continued rise in core PCE means that even after removing the energy disruptions caused by the May US-Iran conflict and the resulting spike in oil prices, America’s "underlying inflation" is still accelerating. The final Q1 GDP was revised up to 2.1%, and both personal income and spending for May posted monthly growth rates of 0.7%, beating market expectations of 0.4% and 0.6%, respectively. Economic resilience combined with sticky inflation is creating a policy dilemma that makes it difficult for the Fed to ease its stance.
Inflation Data Meets Expectations—Why Is the Market More Cautious?
Data that "meets expectations" should, in theory, be absorbed by the market—but the reality is the opposite. After the May PCE data release, market pricing for Fed policy quickly shifted hawkish. According to the CME FedWatch tool, the probability of a rate hike in September jumped from 52% before the data to 85.1% afterward, while expectations for any rate cuts in 2026 were "wiped out." The US Treasury market sent a clear signal: the 10-year yield rose 8 basis points in a single day to 4.42%, while the 2-year yield climbed 12 basis points to 4.55%. Short-term rates moved up even faster, directly reflecting the surge in rate hike expectations.
The core logic behind market caution is the direction of the "expectation gap." Before the data release, the market still held onto a faint hope that inflation might have peaked. After the numbers came in, core PCE hit a new high since October 2023, erasing any possibility of a rate cut this year. The Fed’s June meeting dot plot showed nine officials expecting rate hikes in 2026, with six anticipating more than one hike. The May PCE data served as the first confirmation of this hawkish shift.
Additionally, the structural spread of inflation is alarming. Excluding housing, core services inflation rose 4.2% year-over-year—the most stubborn segment since 2022. Average hourly wages in May increased 3.9% year-over-year, moving in tandem with core PCE and raising the risk of a "wage-price spiral." Inflation is no longer just about energy prices—it’s becoming embedded in the foundations of the US economy.
Tech Stocks Sell Off, Apple Plunges 6%—Industry Dynamics Behind the Moves
The three major US stock indices diverged sharply after the data release. As of the June 26 close, the Dow rose 0.14% to 51,920.62, the Nasdaq fell 0.46% to 25,358.60, and the S&P 500 was nearly flat at 7,357.49. The Nasdaq has now fallen for four consecutive trading days, with large-cap tech stocks under sustained pressure.
The "Big Tech Seven" all dropped: Apple fell 6.12%, marking its largest single-day decline since April 2025; Microsoft was down 3.46%, Amazon 3.10%, Meta 2.65%, Nvidia 1.64%, Google 0.83%, and Tesla 0.11%. The Wind US Big Tech Seven Index fell 2.75% overall.
Apple’s sharp decline was triggered directly by soaring memory chip costs. CEO Tim Cook stated that volatile memory and storage prices are making product price hikes unavoidable. AI-driven demand has disrupted the supply-demand balance, and Apple can no longer rely on its purchasing scale to secure discounted prices. Some of these costs must now be passed on to consumers. Apple announced price increases for Mac and iPad products, with hikes up to $300, sparking concerns about sales volumes and profit margins.
This event highlights a structural contradiction in the tech sector: surging demand for AI infrastructure is pushing upstream memory chip prices higher, while downstream consumer electronics manufacturers are unable to absorb these costs amid inflation. Memory giant Micron soared 15.74% on strong earnings, and SanDisk jumped 21.97%—the "fire and ice" scenario of upstream exuberance and downstream strain is a true reflection of today’s tech supply chain.
How Inflation Expectations and Rate Path Suppress Risk Asset Valuations
The PCE data’s impact on risk assets centers on the "repricing of rate expectations."
When the market prices in an 85%+ probability of a September rate hike, the rise in risk-free rates (US Treasury yields) directly increases the discount rate for all risk assets. For tech stocks, whose valuations rely heavily on future cash flows, the effect of higher discount rates is especially pronounced. The concentrated sell-off in high-valuation tech names like Apple and Microsoft is a direct result of this valuation logic.
A stronger dollar adds to the pressure. Rising rate hike expectations push the dollar index higher, further suppressing dollar-denominated risk assets. Meanwhile, the 10-year Treasury yield at 4.42% means "risk-free returns" are now quite attractive, intensifying the flow of capital from risk assets to safe assets.
More importantly, the market is shifting from debating "whether inflation has peaked" to pricing in "higher rates for longer." The Fed’s dot plot raised the median forecast for overall PCE inflation at the end of 2026 from 2.7% to 3.6%, and for core PCE from 2.7% to 3.3%. This suggests policymakers themselves believe the timeline for returning inflation to the 2% target is lengthening. For risk assets, "higher for longer" is the least favorable policy mix—high financing costs, tightening liquidity, and valuation pressure all hit at once.
Bitcoin Falls Below $60,000: Macro Headwinds and Structural Market Factors
The crypto market took a significant hit after the PCE data release. As of June 26, 2026, Bitcoin dropped below the key $60,000 psychological level, reaching a low of $58,000. According to Gate market data, Bitcoin dipped to $58,106.9 intraday before rebounding to around $59,800, but still failed to reclaim $60,000. Ethereum recovered from a low of $1,532.77 to near $1,565, but overall the rebound was limited.
Market fear surged sharply. The Fear & Greed Index fell to 13, deep in the "extreme fear" zone. Total liquidations across the network reached $1.501 billion in 24 hours, with over 200,000 traders liquidated. Long positions accounted for $1.16 billion of the liquidations.
Bitcoin’s decline is the result of both macro pressures and structural market factors. On the macro side, the PCE data reinforced expectations that the Fed will maintain a tight policy stance. A stronger dollar and rising Treasury yields are suppressing all risk assets, including Bitcoin. Structurally, nearly $10 billion worth of Bitcoin options expired on June 26, amplifying market volatility and directional pressure. Additionally, US spot Bitcoin ETFs saw $469 million in outflows, further weakening demand.
Comparatively, Ethereum fell more than Bitcoin, which fits the classic defensive pattern where capital shifts to larger, more liquid assets when risk appetite contracts.
Structural Pressures Facing Crypto Markets in a Macro Tightening Cycle
The pressures currently facing the crypto market are not short-term—they’re the result of multiple structural factors.
The first major pressure is liquidity contraction. Fed rate hike expectations mean global dollar liquidity will continue to tighten, and crypto assets, as high-beta risk assets, are far more sensitive to liquidity changes than traditional assets. When funding costs rise and risk appetite falls, crypto assets are often the first to be reduced in portfolios.
The second pressure comes from competition with alternative assets. The 10-year Treasury yield at 4.42% means "risk-free returns" are now genuinely attractive. For institutional investors, holding Treasuries offers nearly 4.5% annualized returns with minimal risk—significantly raising the opportunity cost of investing in crypto.
The third pressure is the negative feedback loop in market sentiment. After Bitcoin broke below the $60,000 psychological barrier, widespread long liquidations intensified downward price pressure. The panic triggered by these liquidations further discourages new buyers, creating a self-reinforcing downward spiral.
However, there are some potential mitigating factors to note. The preliminary US-Iran peace agreement signed in mid-June and the reopening of the Strait of Hormuz have brought oil prices back to pre-conflict levels. If June and July inflation data confirm that recent price increases were mainly due to temporary energy shocks, the market’s extreme rate hike expectations could be revised. But until new data confirms this trend, the macro environment remains a headwind for crypto markets.
Summary
The May PCE data sent a clear signal: the downward trajectory of US inflation is facing resistance. Overall PCE rose 4.1% year-over-year, marking a three-year high, while core PCE climbed 3.4%, the highest since October 2023. Although the data met market expectations, the direction was upward, not downward, pushing the probability of a Fed rate hike in September above 85%.
The transmission chain at the asset price level is clear: sticky inflation → rising rate hike expectations → higher Treasury yields → stronger dollar → risk asset valuations under pressure. The Nasdaq has fallen four straight days, all Big Tech names are down, and Apple plunged 6% on soaring memory costs. The crypto market hasn’t escaped either—Bitcoin broke below $60,000, and market sentiment has dropped to extreme fear.
The market is now in a critical tug-of-war between macro data and policy expectations. The PCE data confirms inflation’s stubbornness, but falling oil prices leave room for future inflation surprises. For the crypto market, upcoming inflation reports over the next few months will determine market direction—if a downward trend is confirmed, risk appetite may recover; if inflation remains elevated, tightening policy will continue to weigh on all risk assets.
FAQ
Q1: What are the specific May PCE data figures, and why did the market react so strongly?
Overall PCE rose 4.1% year-over-year in May, the highest since April 2023; core PCE climbed 3.4%, a new high since October 2023. While the data met expectations, it confirmed that inflation is still rising, not falling, causing the probability of a September rate hike to jump to 85%.
Q2: How is Apple’s 6% stock drop connected to inflation data?
Apple’s sharp decline was directly caused by soaring memory chip costs—AI demand drove upstream prices higher, forcing Apple to raise Mac and iPad prices. More fundamentally, the inflation environment confirmed by the PCE data means consumer electronics companies can no longer absorb rising costs internally and must pass them on to consumers, raising concerns about profit margins and sales.
Q3: What are the core drivers behind Bitcoin falling below $60,000?
Bitcoin’s drop is the result of both macro pressures and structural market factors. On the macro side, the PCE data reinforced the Fed’s tightening expectations, and a stronger dollar suppressed risk assets. Structurally, about $10 billion in Bitcoin options expired, increasing volatility, while spot ETFs saw $469 million in outflows.
Q4: What does the PCE data mean for the future of the crypto market?
If June and July inflation data confirm that current inflation is mainly driven by temporary energy shocks, the market’s extreme rate hike expectations may be revised, giving risk assets a chance to breathe. But if inflation stays elevated, tightening policies will continue to weigh on the crypto market.
Q5: What’s the connection between tech stock sell-offs and crypto market declines?
Both are driven by the same macro factors—sticky inflation pushes rate hike expectations higher, which suppresses valuations for all risk assets. Crypto assets, as high-beta assets, typically react even more sharply to tightening liquidity and declining risk appetite.
