Tonight’s September PCE data is coming out, and it might be the most critical indicator in the near term. Right now, global monetary policy is practically in a state of “schizophrenia”—the US is sharpening its knives and preparing for rate cuts, while Japan is dead set on raising rates. One is hitting the gas, the other is slamming the brakes, and the market doesn’t even know whom to trust anymore.

Why is this data considered the anchor of stability? Because it’s directly tied to whether the Fed will actually take action in December. Currently, the market is pricing in about an 87% chance of a rate cut, which makes the sentiment pretty clear. The logic is straightforward: as long as tonight’s data isn’t too wild and doesn’t exceed the 2.9% forecast by much, it basically gives the green light to a rate cut. Any panic-driven liquidations from Japan’s rate hike can be cushioned by the US easing.

In the short term, there’s one thing to watch out for—post-expectation reversal. If the data matches or falls below expectations, all the good news will have been priced in, possibly triggering profit-taking and selling pressure. If there’s a big upside surprise, tightening expectations will return and the market will still drop. But if you zoom out, this US rate cut cycle is just starting, and any dip caused by data volatility could be a mid-term opportunity.

Right now, the market is bouncing back and forth in this “tight Japan, loose US” squeeze. One data point won’t change the long-term trend, but it will create short-term noise. Understanding this logic will keep you from being led around by the nose by single-day swings.