MNI BRIEF: Dombrovskis: Extended Debt Plan Would Help Germany

MNI BRIEF: EC Reviews Estonia Economic Imbalances

MNI China Daily Summary: Wednesday, December 18

MNI BRIEF: China Youth Umemployment Rate Fell In November

MNI CHINA MONEY MARKET INDEX: Easing Expectations Surge

MNI DEC CHINA MONEY MARKET INDEX 36.0 VS NOV 53.5

MNI: US NOV HOUSING STARTS 1.289M; PERMITS 1.505M

MNI: US Q3 CURRENT ACCOUNT GAP -$310.9B

MNI: US MBA: MARKET COMPOSITE -0.7% SA THRU DEC 13 WK

MNI EXCLUSIVE: EU-Mercosur Deal Close, But Likely Short-Lived - Officials

AUSTRALIA: 2025 Election Outcome Looking More Uncertain According To Newspoll

© 1982-2024 MNI. All rights reserved.
Terms | Privacy
Log Out
Free Trial

US DATA: Core PCE Recent Trend Rates Seen Below Target

US DATA
USGlobalEM BulletFixed Income BulletsData BulletBulletMarketsEmerging Market NewsForeign Exchange BulletsRegionNorth America
  • Today’s monthly PCE report for August at 0830ET headlines the US docket.
  • Yesterday’s comprehensive revisions back to 2019 saw very little change in the recent quarterly pace of core PCE inflation (Q2 seen at 2.79 vs 2.77 prior, Q1 at 3.75% vs 3.74).
  • Barring some large changes in the monthly distribution of these quarters, it should have minimal impact on estimates for August. That means that consensus looks for a rounded 0.2% for core PCE inflation but it’s likely to be a ‘low’ 0.2 and with odds of it rounding lower.
  • We saw analyst estimates (post CPI, PPI and in case some explicitly import prices) for core PCE inflation average 0.16% M/M in August after 0.16% in July, whilst the Fed’s Waller estimates somewhere around 0.14% M/M. (Note that Nomura revised up their estimate from 0.135 to 0.16% after yesterday's revisions).
  • The above revisions saw Y/Y core PCE inflation revised up slightly back in Q2 from 2.65% to 2.73% Y/Y, which should help the August Y/Y round more firmly to 2.7%. Base effects are expected to keep this Y/Y rate relatively elevated into year-end (the median FOMC participant pencils in 2.6% for 4Q24, although that was down from 2.8% in the June SEP) but run rates are coming in meaningfully lower.
  • Prior to latest revisions, a 0.16% M/M increase for core PCE would see three-month inflation at just 1.8% annualized and a six-month rate of 2.4%. Note that Gov. Waller on CIBC last week somewhat cherry-picked a four-month average which he saw as on track for 1.8% annualized.
  • Should this be realized, it will likely dial up the odds that the Fed continues with a front-loaded cutting cycle in November (Fed Funds pricing 38bps), with even a mild further deterioration in labor data enough to cement it. There are however two NFP reports, one CPI/PPI round and not least the presidential election all to come before the Nov 7 FOMC decision.
320 words

To read the full story

Close

Why MNI

MNI is the leading provider

of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.

Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
  • Today’s monthly PCE report for August at 0830ET headlines the US docket.
  • Yesterday’s comprehensive revisions back to 2019 saw very little change in the recent quarterly pace of core PCE inflation (Q2 seen at 2.79 vs 2.77 prior, Q1 at 3.75% vs 3.74).
  • Barring some large changes in the monthly distribution of these quarters, it should have minimal impact on estimates for August. That means that consensus looks for a rounded 0.2% for core PCE inflation but it’s likely to be a ‘low’ 0.2 and with odds of it rounding lower.
  • We saw analyst estimates (post CPI, PPI and in case some explicitly import prices) for core PCE inflation average 0.16% M/M in August after 0.16% in July, whilst the Fed’s Waller estimates somewhere around 0.14% M/M. (Note that Nomura revised up their estimate from 0.135 to 0.16% after yesterday's revisions).
  • The above revisions saw Y/Y core PCE inflation revised up slightly back in Q2 from 2.65% to 2.73% Y/Y, which should help the August Y/Y round more firmly to 2.7%. Base effects are expected to keep this Y/Y rate relatively elevated into year-end (the median FOMC participant pencils in 2.6% for 4Q24, although that was down from 2.8% in the June SEP) but run rates are coming in meaningfully lower.
  • Prior to latest revisions, a 0.16% M/M increase for core PCE would see three-month inflation at just 1.8% annualized and a six-month rate of 2.4%. Note that Gov. Waller on CIBC last week somewhat cherry-picked a four-month average which he saw as on track for 1.8% annualized.
  • Should this be realized, it will likely dial up the odds that the Fed continues with a front-loaded cutting cycle in November (Fed Funds pricing 38bps), with even a mild further deterioration in labor data enough to cement it. There are however two NFP reports, one CPI/PPI round and not least the presidential election all to come before the Nov 7 FOMC decision.