📉US100 below 12000 pts after PCE data❗

⬇Higher than expected PCE figures put pressure on US equities

Futures tied to major Wall Street indices fell sharply after publication of latest data pack for January. Attention was mostly on PCE inflation data and it surprised to the downside. When it comes to market reaction, index futures deepen declines with US100 below 12,000 pts while US dollar strengthened.Core PCE prices in the US, which exclude food and energy, jumped by 0.6%MoM in January, compared to a downwardly revised 0.2% increase in the previous month and above market estimates of 0.4%. The annual rate, the Federal Reserve’s preferred gauge to measure inflation, rose by 4.7% and surpassed market expectations of 4.3%, boosting bets that Fed policymakers will keep interest rates at higher level for longer to tame unsustainable price growth. Meanwhile, the headline figure rose by 0.6% from the previous month.

Personal income in the United States rose by 0.6% from a month earlier in January, accelerating from an upwardly revised 0.3% gain in December but missing market expectations of 1.0% growth. The increase in income was led by rising compensation, reflecting private wages and salaries in both services-producing industries and goods-producing industries. Meanwhile, government social benefits were down in January, as a decrease in “other” benefits due to the expiration of the extended child tax credit as well as a decline in one-time refundable tax credits issued by states was partly offset by an increase in Social Security. 

Personal spending in the US jumped 1.8% month-over-month in January, rebounding from a downwardly revised 0.1% drop in December and beating market forecasts of a 1.3% rise. It is the biggest increase since March of 2021, in a sign the consumer spending started the year on strong footing. Within goods, the increase was widespread and led by motor vehicles and parts as well as "other" nondurable goods (led by pharmaceuticals). Within services, the largest contributor to the increase was spending for food services.

US100 fell below psychological support at 12000 pts and currently tests 200 SMA (red line). If current sentiment prevails, downward move may deepen toward next support at 11500 pts. Source: xStation5