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The Trader: All eyes on the core PCE reading

Another marginal nudge upwards in UK shares this morning but the sense is of a holding pattern right now waiting on further inflation signals
The Trader: All eyes on the core PCE reading
  • Fresh record highs on Wall Street overnight
  • Traders watching for more inflation data today
  • Nike shoots the lights out with results

US indices marked fresh record highs yesterday as the White House inked a bipartisan infrastructure package. European stocks remain range bound and had a mixed open in early trade Friday. US benchmark 10yr yields trade a little under 1.5 per cent and gold is stuck in the range of the last week at $1,780. Markets seem to be comfortable with the Fed’s position on inflation, but we are still waiting for a breakout in yields to really shake things up. For now, the path of least resistance is up, but there is an air of complacency. 

The big release today is the core PCE inflation print – the Fed’s preferred gauge of inflation. The core PCE deflator is expected at 3.4 per cent year-on-year, up from 3.1 per cent the month before, though the month-on-month is expected to slow to 0.6 per cent from 0.7 per cent the previous month. As before, it’s the month-on-month numbers that really count and tell us whether it’s as transitory as the Fed is telling us. Fed speakers on the roster today to jawbone any hot inflation reading include Kashkari, Mester, Rosengren and Williams. There’s an EU Council meeting today, too. 

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