BEA Inflation Gauge Overhaul and Strategy's Bitcoin Sale Spark Market Interest

The Bureau of Economic Analysis (BEA) is reformulating its key inflation gauge, which has significant implications for investors and policymakers. The BEA's current method of calculating inflation is based on Personal Consumption Expenditures (PCE), but it will soon be changing how it treats certain categories. Specifically, the BEA will now use data from videogame and web-hosting services to measure software prices, rather than relying on a broader index that includes hardware costs.

This change is expected to lower PCE by around two-tenths of a percentage point when it takes effect with the August data reported in September. Economists believe this will have a relatively small impact on inflation overall, as it has run above the Fed's 2% target for more than five years.

However, some analysts are questioning whether politics played a role in the BEA's decision to reformulate its inflation gauge, particularly given that the changes won't affect the way the new Fed chairman, Kevin Warsh, views inflation. The timing of this action will likely draw scrutiny from markets and media outlets.

In a separate development, Strategy, a company known for its large bitcoin holdings, has sold 1,638 BTC to raise $104.7 million. This is the third such sale in recent months, and it reduces Strategy's holdings to 842,138 coins. While this may be seen as a break from Michael Saylor's promise not to sell his own bitcoin, he notes that 'Strategy is a public company, not my wallet.'