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US DATA: Core PCE Seen On Track To Overshoot Median FOMC Forecast - 1000ET

US DATA
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  • Released today at the unusual time of 1000ET, Bloomberg consensus sees core PCE inflation at 0.3% M/M in October after the 0.25% M/M in September.
  • We see unrounded estimates looking for a slightly ‘low’ 0.3%, with a median of 0.28% in the below table.
  • From some of the more detailed estimates, Nomura expect small downward revisions of only 1bp to both Aug and Sept readings, whilst TD Securities see their estimate of 0.27% M/M for core PCE including a 0.39% M/M increase for supercore.
  • Powell on Nov 14: “Estimates based on the consumer price index and other data released this week indicate that total PCE prices rose 2.3 percent over the 12 months ending in October and that, excluding the volatile food and energy categories, core PCE prices rose 2.8 percent.”
  • Revisions do indeed look like they’re expected to be small then, seeing as a 0.28% M/M increase without any revisions would translate to 2.80% Y/Y after the 2.65% in September.
  • We'll have a crude idea of revisions in the Q3 release that follows shortly beforehand at 0830ET as part of the second Q2 national accounts release.
  • Importantly, whilst these upward base effects into year-end were already known, recent run rates would have continued to firm. A 0.28% M/M (again, assuming no revisions for a basic illustration) would see a three-month run rate of 2.8% after 2.3% in Sept and recent lows of 1.9% in Jul-Aug. Alternatively, and smoothing some recent noise, the six-month would inch a tenth higher to 2.4%.  
  • The latest trends are also, notably, leaving core PCE inflation on track to overshoot the median FOMC forecast of 2.6% for Q4 from the Sept SEP, revised down from June’s 2.8%. For a purely indicative exercise, a 0.28% M/M increase in Oct followed by two 0.20% readings would see 2.9% Y/Y in Q4, in line with the (presumably) most hawkish members considering the FOMC range of 2.4-2.9% for Q4. 
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  • Released today at the unusual time of 1000ET, Bloomberg consensus sees core PCE inflation at 0.3% M/M in October after the 0.25% M/M in September.
  • We see unrounded estimates looking for a slightly ‘low’ 0.3%, with a median of 0.28% in the below table.
  • From some of the more detailed estimates, Nomura expect small downward revisions of only 1bp to both Aug and Sept readings, whilst TD Securities see their estimate of 0.27% M/M for core PCE including a 0.39% M/M increase for supercore.
  • Powell on Nov 14: “Estimates based on the consumer price index and other data released this week indicate that total PCE prices rose 2.3 percent over the 12 months ending in October and that, excluding the volatile food and energy categories, core PCE prices rose 2.8 percent.”
  • Revisions do indeed look like they’re expected to be small then, seeing as a 0.28% M/M increase without any revisions would translate to 2.80% Y/Y after the 2.65% in September.
  • We'll have a crude idea of revisions in the Q3 release that follows shortly beforehand at 0830ET as part of the second Q2 national accounts release.
  • Importantly, whilst these upward base effects into year-end were already known, recent run rates would have continued to firm. A 0.28% M/M (again, assuming no revisions for a basic illustration) would see a three-month run rate of 2.8% after 2.3% in Sept and recent lows of 1.9% in Jul-Aug. Alternatively, and smoothing some recent noise, the six-month would inch a tenth higher to 2.4%.  
  • The latest trends are also, notably, leaving core PCE inflation on track to overshoot the median FOMC forecast of 2.6% for Q4 from the Sept SEP, revised down from June’s 2.8%. For a purely indicative exercise, a 0.28% M/M increase in Oct followed by two 0.20% readings would see 2.9% Y/Y in Q4, in line with the (presumably) most hawkish members considering the FOMC range of 2.4-2.9% for Q4.