Tonight’s September PCE data could be the most crucial signal amidst the current chaotic market conditions. Global monetary policy now looks like two trains heading for a collision—on the US side, there’s a high probability of rate cuts with the gas pedal floored; in Japan, a rate hike is set in stone, with the brakes slammed hard. This rare reversal in policy has thrown the market into complete confusion in the short term, with no clear direction.

Why is tonight’s data so important? Because it directly determines the next move for US monetary policy. Right now, the market is pricing in about an 87% chance of a Fed rate cut in December, so the logic is simple: as long as the data isn’t wildly off the mark and doesn’t significantly exceed the 2.9% forecast, it basically gives the green light for a rate cut. This could help ease the “unwinding” panic triggered by Japan’s rate hike and inject liquidity into risk assets.

What about the short term? Watch out for volatility after expectations are met. If the data matches or falls below expectations, be wary of a “sell the news” reaction, with short-term capital possibly exiting immediately; if the data unexpectedly comes in strong, tightening expectations will spike, and downside risk will surge. But looking at the bigger picture, the main trend of US rate cuts remains intact—any short-term pullbacks triggered by data could be great opportunities for mid-term positioning.

Don’t let a single data release throw off your rhythm. Understand the big framework of “tight Japan, loose US” to hold onto your positions with confidence.