PCE Report Looms as Key Test for US Economy

The US economy faces a crucial test on Wednesday as the Bureau of Economic Analysis releases July's personal consumption expenditures (PCE) report. The data will determine whether core PCE rises about 0.2% month on month, with annual underlying inflation remaining above 3%. Fundstrat's Tom Lee considers this one of three major hurdles for markets this week, alongside Nvidia earnings and Fed Chair Kevin Warsh's Jackson Hole speech.

Tesla is exposed to bond yields because its valuation depends heavily on profits investors expect years from now. A hotter core PCE print could push Treasury yields higher, raising the discount rate applied to future cash flows. This would negatively impact Tesla's valuation.

Coinbase stock offers a higher-beta route into the inflation trade because PCE can move Treasury yields, the dollar, and expectations for Federal Reserve policy. A softer inflation print could weaken yields and the dollar, potentially giving Bitcoin another attempt at recent highs and supporting Coinbase activity.