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US DATA: Core PCE Confirms Likely Beat Of FOMC Forecast, Supercore Above Target

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  • Core PCE inflation was broadly as expected in October at 0.27% M/M (cons 0.3, unrounded 0.28).
  • It saw the 3-mth run rate accelerate to 2.8% annualized from 2.4 in Sep and 1.9 in Jul-Aug, whilst the six-month rate held steady at 2.3% annualized.
  • The Y/Y rate was also as expected at 2.80% Y/Y (note that cons was 2.8 and not the 2.6 noted in our unrounded post), which as we noted in the preview leaves it on track for a sizeable overshoot of the median FOMC projection of 2.6% for Q4 (from the Sept SEP having revised down from 2.8% in the June SEP).
  • Indeed, two 0.20% M/M readings ahead would indicatively leave core PCE at 2.9% Y/Y, on track with the (presumably) most hawkish members considering the FOMC range of 2.4-2.9% for Q4.
  • Supercore PCE inflation printed a strong 0.36% M/M in Oct after a slightly upward revised 0.31% M/M in Nov (initial 0.30). We hadn’t seen many detailed estimates beforehand but TDS had looked for 0.39% M/M.
  • That leaves it running at 3.5% annualized over three months, 2.9% over six months and 3.5% Y/Y. The three-month rate recently bottomed out at 2.2% in July whilst the six-month rate has stabilized at an average 2.8% for the past four months. Supercore averaged 2.2% Y/Y through 2010-19 and ended 2019 at 1.9% Y/Y so latest trends remain at a rate comfortably above historically norms.
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  • Core PCE inflation was broadly as expected in October at 0.27% M/M (cons 0.3, unrounded 0.28).
  • It saw the 3-mth run rate accelerate to 2.8% annualized from 2.4 in Sep and 1.9 in Jul-Aug, whilst the six-month rate held steady at 2.3% annualized.
  • The Y/Y rate was also as expected at 2.80% Y/Y (note that cons was 2.8 and not the 2.6 noted in our unrounded post), which as we noted in the preview leaves it on track for a sizeable overshoot of the median FOMC projection of 2.6% for Q4 (from the Sept SEP having revised down from 2.8% in the June SEP).
  • Indeed, two 0.20% M/M readings ahead would indicatively leave core PCE at 2.9% Y/Y, on track with the (presumably) most hawkish members considering the FOMC range of 2.4-2.9% for Q4.
  • Supercore PCE inflation printed a strong 0.36% M/M in Oct after a slightly upward revised 0.31% M/M in Nov (initial 0.30). We hadn’t seen many detailed estimates beforehand but TDS had looked for 0.39% M/M.
  • That leaves it running at 3.5% annualized over three months, 2.9% over six months and 3.5% Y/Y. The three-month rate recently bottomed out at 2.2% in July whilst the six-month rate has stabilized at an average 2.8% for the past four months. Supercore averaged 2.2% Y/Y through 2010-19 and ended 2019 at 1.9% Y/Y so latest trends remain at a rate comfortably above historically norms.