Core PCE Price Index Rises 2.9% YoY, Influencing U.S. Market Trends

Summary

  • The PCE price index (excluding food and energy factors) saw a 0.2% growth in December, following a 0.1% increase in November. This resulted in a 2.9% year-on-year surge of the core PCE index, marking the least significant rise since March 2021.
  • US stock futures switched from a minor loss to a 0.1% profit, with US Treasury 10-year yield undergoing a minor decrease to sit at 4.109%. The FOREX was last noted as a 0.28% decline.
  • Findings from the key market players were generally positive, pointing towards good numbers and suggesting the possibility of an economic soft landing.

Details on PCE Price Index and Market Reactions

When food and energy factors are discounted, December’s PCE price index saw a 0.2% rise, succeeding a 0.1% increase the month before – November. This development led to a 2.9% annual surge in the primary PCE index, indicating the least growth witnessed since March the previous year.

As for market reactions, US stock futures turned a minor decline around to record a 0.1% gain. Additionally, US Treasury 10-year yield initially surged but eventually settled lower at 4.109%. Meanwhile, FOREX was down 0.28% at last check.

Remarks from Key Market Players

Chief Fixed Income Strategist at Janney Montgomery Scott, Guy Lebas highlighted an initial rally that transitioned into a sell-off that morning, which was loosely tied to the spending and inflation reports.

Quincy Krosby, the Chief Global Strategist at LPL Financial, noted the positive significance of these findings for the Federal Reserve and highlighted the continuous rise of consumer spending as well as expectations for future economic stimulus.

Reactions from Market Economists and Investment Officers

The Chief Market Economist at Spartan Capital Securities, Peter Cardillo, and Kim Forrest, the Chief Investment Officer at Bokeh Capital Partners, expressed satisfaction with indicators pointing towards inflation under 3% and moving towards the 2% goal. They also acknowledged the strength of personal spending.

Portfolio Managers Reactions

Senior Portfolio Manager at Dakota Wealth, Robert Pavlik, emphasized that the results fell within expectations, aligning with reports on consumer spending aiding economic growth.

This aforementioned financial data, marked by changes in PCE index, stock futures, and treasury yields, does have implications on forex trading or investment strategies. It sets the groundwork for an environment that might impact the value of certain assets, prompting possible shifts in market behavior.

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