Technical Analysis

US December PCE core inflation +4.4% vs +4.4% expected


Core PCE data y/y

Consumer spending and income for November:

  • Personal income +0.2% vs +0.2% expected. Prior month +0.4%
  • Personal spending -0.2% vs -0.1% expected. Prior month +0.1%
  • Real personal spending -0.3% vs +0.0% prior

Under the covers of this report, the Fed might not like seeing services inflation up 0.7% m/m. That’s counteracted by a 1.0% decline in goods prices, including -2.3% in durable goods. Powell has expressed worry about core services inflation remaining high and said that’s why they plan to hike to 5.00-5.25% and stay there.

The US dollar is a tad softer on the data, perhaps as the market focuses on the softening spending metrics as a forward-looking indicator of a weakening economy.

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