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Watching Where Core PCE Upward Revisions Land In Q2 [1/2]

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  • Today’s PCE report for June at 0830ET headlines the docket.
  • Bloomberg consensus sees core PCE inflation at 0.2% M/M in a close call with 0.1 (average 0.15). Indeed, the unrounded estimates we’d seen after CPI and PPI estimates had averaged 0.17% M/M.
  • Those are now a little stale after yesterday’s stronger than expected Q2 advance release of 2.89% annualized vs cons 2.7 (albeit with slight skew to 2.8) and above every analyst entry.
  • On its own it would imply a 0.28% M/M reading for core PCE in June but we feel it more likely to instead be spread over prior months in the quarter. That has happened a few times recently after past quarterly surprises, providing a partly offsetting market reaction to the prior day’s surprise.
  • The current profile sees 0.26% M/M in Apr before what was a surprisingly soft 0.08% M/M in May.
  • Non-housing core services remain will also be watched closely for the latest outturn and revisions, having moderated from 0.28% M/M to 0.096% M/M in May.
  • The CPI supercore equivalent has seen two particularly weak readings in the latest two months of -0.04% in May and -0.05% in June even if that does reflect some idiosyncratic factors at play.

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  • Today’s PCE report for June at 0830ET headlines the docket.
  • Bloomberg consensus sees core PCE inflation at 0.2% M/M in a close call with 0.1 (average 0.15). Indeed, the unrounded estimates we’d seen after CPI and PPI estimates had averaged 0.17% M/M.
  • Those are now a little stale after yesterday’s stronger than expected Q2 advance release of 2.89% annualized vs cons 2.7 (albeit with slight skew to 2.8) and above every analyst entry.
  • On its own it would imply a 0.28% M/M reading for core PCE in June but we feel it more likely to instead be spread over prior months in the quarter. That has happened a few times recently after past quarterly surprises, providing a partly offsetting market reaction to the prior day’s surprise.
  • The current profile sees 0.26% M/M in Apr before what was a surprisingly soft 0.08% M/M in May.
  • Non-housing core services remain will also be watched closely for the latest outturn and revisions, having moderated from 0.28% M/M to 0.096% M/M in May.
  • The CPI supercore equivalent has seen two particularly weak readings in the latest two months of -0.04% in May and -0.05% in June even if that does reflect some idiosyncratic factors at play.