Tonight, the September PCE data will be released, which could serve as a stabilizing force amid the current chaotic market conditions.

Global liquidity is now in a state of contradiction: the US is likely to step on the gas and cut rates, while Japan has clearly indicated it will raise rates. This rare policy divergence has left many people confused in the short term.

That’s why tonight’s data is so crucial—it will tell us which direction the US is heading. Currently, the market is pricing in about an 87% chance of a rate cut in December. The logic is pretty straightforward: as long as the data doesn’t come in explosively higher than the 2.9% expectation, it basically gives the green light for a rate cut decision. This can help ease some of the "unwinding" pressure brought by Japan’s rate hikes and provide underlying liquidity for risk assets.

In the short term, be mindful of volatility after expectations are met. If the data meets or falls below expectations, beware of selling pressure after the good news is priced in. If the data is unexpectedly strong, it could intensify tightening concerns and widen the decline. But in the longer term, the big narrative of US rate cuts is still in play, so any short-term pullback triggered by the data may actually present a window of opportunity for medium-term positioning.

In short: don’t be swayed by a single data point. Understanding the bigger picture of "tightening in Japan, easing in the US" is key to holding your position.