US DATA
We'll update on analysts' revised expectations for October's PCE price release following today's CPI inputs. Coming into today, October core PCE looked to come in the mid-0.20s (MNI median 0.24%). As far as the detail of the CPI release is concerned, it's unlikely to change many minds on the PCE outcome, and core PCE M/M looks very likely to print below core CPI (0.28%) for the 3rd consecutive month and 10th in the last 13. Recall that while most of the contributions to PCE come from the CPI report, the bulk of the remainder (including healthcare services, airfares, and portfolio management) will come in Thursday's PPI report.
- The main meaningful core upside surprises in CPI were in used cars, which should translate into PCE, but also in airfares (an unexpectedly strong 3.2% in CPI) which has its own separate version in PPI that is used for PCE purposes.
- Also importantly, housing carries a smaller relative weight in PCE than in CPI, so the slight upside surprise in today's report in OER and rents is likely to be relatively muted in terms of upside PCE translation.
- Note that in CPI, medical services categories softened slightly, but PPI could show a different story (some analysts see it being much higher vs CPI equivalents). PCE also has its own separate version of CPI auto insurance (which at -0.1% was a surprise drag on CPI inflation).
- Overall, it looks mixed. Some analyst expectations coming into the CPI release:
- Nomura: 0.274%
- Barclays: 0.26%
- Citi: 0.24%
- Goldman: 0.24%
- Deutsche: 0.21%
- Wrightson ICAP: 0.2%
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