Fed governors diverge on rates: high enough, or just getting started?
Views 9843 Contents 105
October PCE Price Index Preview: The Race Between Income and Inflation Is More Critical
The Bureau of Economic Analysis will release the Personal Consumption Expenditure and the price index at 8:30 ET on Thursday. The price index is expected to drop to 3.1% YoY in October from 3.4% in September, and the core PCE price index is expected to fall back to 3.5%.
■ Import prices continue to ease inflationary pressures.
The decline in import prices in October was one of the key reasons that kept pushing down the cost of living. The data released by the Bureau of Labor Statistics fell by 2% in October. For the detailed information, items such as Foods, feeds, and beverages decreased by 0.6 percent MoM. Building materials price decreased by 0.8% MoM. Even if we exclude fuels and foods, the overall index still fell by 0.2%.
■ Energy price risk waned as geopolitical events failed to stimulate oil price.
US crude oil experienced a significant inventory build in October. This completely offsets the upward pressure on oil prices caused by unrest in the Middle East since October 7th.
On the other hand, after OPEC+ agreed to limit output in June, Saudi Arabia has expressed dissatisfaction with the production levels of other OPEC members. ING's Warren Patterson noted that disagreement among OPEC members would heighten price volatility, but Citigroup analysts said they did not expect any surprises from the OPEC meeting.
■ The market has priced in no more interest rate hikes by the Fed.
Federal Reserve's official Loretta Mester said recently that the officials want 'more evidence' that inflation has been defeated. However, following the reports of CPI released earlier this month, market pricing in the futures market completely eliminated the possibility that the Fed would approve any additional interest rate hikes.
Investors will await comments from Fed officials ahead of a quiet period that begins on December 2. Federal Reserve Chairman Jerome Powell will speak on Friday.
■ Personal saving rate is the key indicator to watch next.
What will be released along with PCE, personal income and outlays on Thursday is the US Personal Saving Rate.
The saving rate began to pick up at the end of last year but fell again this year. This seems to go against people's expectations in the Goldilocks period, when inflation normally decreases, and residents could deposit more in their bank accounts. The soon-to-be-released figures will guide on whether household income really outperformed inflation, which may determine the sustainability of the US consumption trend in the next year.
Disclaimer: Moomoo Technologies Inc. is providing this content for information and educational use only. Read more