### POV: STRONG PCE TO UNDERSCORE...>

US DATA PREVIEW: ### POV: STRONG PCE TO UNDERSCORE TWO MORE RATE HIKES THIS

YEAR.

- Fri's PCE price index headlines otherwise week of second tier data. If MoM

core PCE comes out higher than anticipated...pushing YoY over 2.0%, short end

rates markets will sell-off, taking it as a sign the Fed is more likely to hike

2 more times in 2018. 

- CURRENT chances of a third hike at the Sep 26 FOMC is 76.3%, a 4th at the Dec

19 FOMC is at 39.8% (according to MNI's PINCH model). If PCE comes out higher

than forecast, chances for a Sep hike will climb to low 80%s, and Dec to low-mid

40%s.

- CAVEATS: It's early summer, market depth is lacking so price action can be

sloppy. An off consensus release will be quickly discounted by deeper pockets as

focus turns to the following Friday's NFP (an off-consensus PCE should not

unduly affect NFP est's, but a strong Jun NFP read--say >275k will serve to

underscore front end selling (as rate hike% fopr Sep and Dec become more

likely).