US manufacturing costs soar, $85,000 BTC rebound blocked

According to Woofun AI, US manufacturers reported a more common increase in input prices in September. If this cost pressure triggers market expectations of rising interest rates, it will directly increase Bitcoin's financing risk and prevent it from rebounding towards the $85,000 target.

According to data released by the American Institute for Supply Management (ISM.US) on October 1, the manufacturing price index climbed to 77.9 in September, a sharp increase of 6.8 points from 71.1 in August. It is worth noting that this index is not an inflation rate, but rather an indicator of the proportion of companies that have increased prices: 58.6% of the companies surveyed reported rising input prices, compared to 46.2% in August.

Meanwhile, the manufacturing PMI recorded 54.5, the new orders indicator was 55.3, and the employment status indicator was 52.7. Data compiled by Woofun AI shows that strong manufacturing activity and increased cost pressure are intertwined, complicating the need for policies to lower interest rates. The index is calculated by adding the proportion of companies with rising prices to half of the proportion of companies with constant prices. The value of 77.9 highlights the breadth of cost transmission rather than the level of inflation of 77.9%.

The Federal Open Market Committee (FOMC.US) raised the target interest rate range by 0.25 percentage points to between 3.75% and 4% on September 16. New York Federal Reserve Governor Williams (NYFR.US) said on September 29 that if the economy is in line with the forecast, it may be appropriate to raise interest rates again later this year, but he stressed that there is currently no indication that price fluctuations will evolve into long-lasting inflation. The Federal Reserve theory states that policy changes affect short-term borrowing costs and short-term US Treasury bond yields, while policy expectations affect long-term interest rates. The US Bureau of Labor Statistics (BLS.US) is scheduled to release September employment data on October 2. ISM manufacturing employment indicators cannot replace this national statistic. If employment data strengthens expectations of interest rate hikes, financing costs and high returns on interest-bearing US dollar assets will inhibit risk appetite; conversely, if short-term US Treasury yields or expected policy interest rates fall, the transmission effect will weaken. In February 2023, the New York Federal Reserve (NYFR.US) study found no systematic reaction of Bitcoin to monetary policy and macroeconomic news.

The real test is whether Bitcoin responds to changes in interest rate expectations, rather than simply believing that rising manufacturing costs will inevitably cause prices to fall. Friday's employment data will confirm. If expectations of interest rate hikes are strengthened, financing risks and high return levels will be a serious obstacle; if expectations ease, the pressure will ease. Investors need to comprehensively interpret macroeconomic news and determine the impact of monetary policy trends on borrowing costs and returns on interest-bearing US dollar assets, so as to assess the possibility of a systemic reaction facing Bitcoin.