A monthly data pack for March from the United States, including PCE inflation, was released today at 1:30 pm BST. Report was closely watched as PCE is Fed's preferred measure of inflation and the next rate decision of US central bank is scheduled for Wednesday next week. Market was expecting a small acceleration in headline PCE as well as small deceleration in core PCE. Personal income growth was expected to accelerate compared to a month ago, while personal spending growth was expected to slow.
Actual report turned out to be a hawkish surprise, with headline accelerating more than expected and core PCE holding unchanged. However, data matched expectations on a month-over-month basis. Personal income grew 0.5% MoM, in-line with expectations, while personal spending increased 0.8% MoM, more than expected.
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- Headline PCE (annual): 2.7% YoY vs 2.6% YoY expected (2.5% YoY previously)
- Headline PCE (monthly): 0.3% MoM vs 0.3% MoM expected (0.3% MoM previously)
- Core PCE (annual): 2.8% YoY vs 2.7% YoY expected (2.8% YoY previously)
- Core PCE (monthly): 0.3% MoM vs 0.3% MoM expected (0.3% MoM previously)
- Personal income: 0.5% MoM vs 0.5% MoM expected (0.3% MoM previously)
- Personal spending: 0.8% MoM vs 0.6% MoM expected (0.8% MoM previously)
In spite of the data being slightly hawkish, US dollar dropped in a knee-jerk move, with EURUSD jumping around 0.2%. However, around half of the move has been erased already. Equity indices, like US500, moved higher.
Source: xStation5
