Title: US PCE Core Misses Expectations, Raises Speculation of Downside Miss on December Headline PCE
The recently released data on Personal Consumption Expenditures (PCE) has raised speculation about a possible downside miss on the December headline PCE. While the headline PCE came in at the expected +2.6%, the PCE Core, which excludes volatile food and energy prices, fell slightly short. The PCE Core year-on-year prior stood at +3.2%, contrasting with the expected +2.6%.
One area that contributed to this slight miss was the PCE services ex-energy and housing category, which rose by 0.3% month-on-month (m/m). This increase could potentially have an impact on lifting the value of the dollar in the markets. The market has seen slight fluctuations in Treasury yields following the release of this data.
Furthermore, the Personal Income for the period grew by 0.3%, aligning with expectations, while Personal Spending outperformed predictions with a growth rate of 0.7%, versus the expected 0.4%. The Real Personal Spending, which factors in inflation, also increased by 0.5%, the same rate as the previous period.
Both the three-month and six-month annualized core and headline PCE data now indicate figures below the Federal Reserve’s target, further underscoring the softer headline inflation in the economy. These figures indicate that the Federal Reserve may face challenges in reaching their desired inflation target.
The market now anxiously awaits the release of the December headline PCE data in order to understand the impact of the recent trends in consumer spending. The PCE is a crucial indicator of inflation and consumer expenditure and is closely monitored by investors and policymakers alike.
Although the overall PCE figures did not deviate significantly from the expected results, the slight miss in the core PCE and the rise in PCE services ex-energy and housing category raise concerns about the future trajectory of inflation in the US economy. Analysts and economists will closely watch the upcoming data releases to see if this trend persists in the coming months.
The PCE data has the potential to influence several aspects of the economy, including interest rates, market movements, and consumer sentiment. As a result, investors and traders will be keeping a close eye on future PCE data releases in order to gauge the health of the US economy and potential implications for monetary policy.
