{"id":194131,"date":"2023-07-28T11:15:00","date_gmt":"2023-07-28T15:15:00","guid":{"rendered":"https:\/\/ibkrcampus.com\/?p=194131"},"modified":"2023-07-28T12:31:07","modified_gmt":"2023-07-28T16:31:07","slug":"feds-favored-inflation-gauge-cools-to-2-year-lows-strong-spending-keeps-fed-rate-bets-steady","status":"publish","type":"post","link":"https:\/\/www.interactivebrokers.com\/campus\/traders-insight\/securities\/macro\/feds-favored-inflation-gauge-cools-to-2-year-lows-strong-spending-keeps-fed-rate-bets-steady\/","title":{"rendered":"Fed&#8217;s Favored Inflation Gauge Cools To 2-Year Lows: Strong Spending Keeps Fed Rate Bets Steady"},"content":{"rendered":"\n<h2 class=\"wp-block-heading\" id=\"h-zinger-key-points\">ZINGER KEY POINTS<\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Headline PCE inflation falls from 3.8% in May to 3% in June of 2023, the lowest since March 2021.<\/li>\n\n\n\n<li>Core PCE inflation, which the Fed closely monitors, fell from 4.6% to 4.1% yearly, the lowest level since September 2021.<\/li>\n<\/ul>\n\n\n\n<p class=\"wp-block-paragraph\">Inflation statistics keep pointing to a gradual decrease in price pressures&nbsp;across the economy. This is what emerges&nbsp;from the June report of the&nbsp;<strong>Personal Consumption Expenditure&nbsp;<\/strong>(PCE) price index released on Friday by the&nbsp;<a href=\"https:\/\/www.benzinga.com\/economics\/macro-economic-events\/23\/07\/33425280\/feds-preferred-measure-of-inflation-in-focus-implications-of-junes-pce-inflation-\" target=\"_blank\" rel=\"noreferrer noopener\"><strong>Bureau of Economic Analysis<\/strong>.<\/a><\/p>\n\n\n\n<p class=\"wp-block-paragraph\">In June, the Fed\u2019s preferred measure of underlying inflation fell to 4.1% year-on-year, slightly below&nbsp;economist projections of 4.2%, reinforcing investor optimism that the most intense period of elevated price pressures has now passed.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Concurrently, the BEA reported that monthly consumer spending increased 0.5% in June, up from 0.1% the previous month and exceeding estimates of a 0.4% gain.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Key Highlights from the June\u2019s PCE Report:<\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>The U.S. PCE&nbsp;price index&nbsp;came in at 3% year-on-year in June,&nbsp;falling from the 3.8% annual rate in May, and matching the the expected 3%. This marks the lowest level for PCE inflation since March 2021.<\/li>\n\n\n\n<li>On a monthly basis, PCE inflation surged 0.2%, accelerating from the 0.1% rise in May but in line with the expected 0.2% increase.<\/li>\n\n\n\n<li>&nbsp;Food prices increased 4.6% year-on-year and energy prices fell 18.9% . Prices for goods fell 0.6% and prices for services rose 4.9% annually.&nbsp;<\/li>\n\n\n\n<li>The Fed\u2019s preferred measure of inflation, the core PCE price index (PCE less food and energy), dropped from 4.6% to 4.1% yearly in June, slightly below estimates of 4.2%. This marks the lowest level for core PCE inflation since October 2021.<\/li>\n\n\n\n<li>Core PCE inflation advanced at 0.2% monthly pace, decelerating from the 0.3% rise in May and in line with the expectations.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\">Market Reactions<\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">Traders are assigning a 20% probability of a 25-basis-point rate hike in September and a 29% probability of a hike by the November meeting, unchanged following the data.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Futures on the S&amp;P 500 are up 0.6% an hour before the opening bell, suggesting a positive start on Friday. <\/p>\n\n\n\n<p class=\"wp-block-paragraph\">&#8212;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Originally Posted July 28, 2023 &#8211; <a href=\"https:\/\/www.benzinga.com\/economics\/macro-economic-events\/23\/07\/33441488\/feds-favored-inflation-gauge-cools-to-2-year-lows-strong-spending-keeps-fed-rate-\">Fed&#8217;s Favored Inflation Gauge Cools To 2-Year Lows: Strong Spending Keeps Fed Rate Bets Steady<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Headline PCE inflation falls from 3.8% in May to 3% in June of 2023, the lowest since March 2021.<\/p>\n","protected":false},"author":1128,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":"","jetpack_post_was_ever_published":false},"categories":[18,6,8,9,26,3],"tags":[77,2730,570],"contributors-categories":[13584],"class_list":["post-194131","post","type-post","status-publish","format-standard","category-macro","category-north-america","category-region","category-securities","category-text-articles","category-traders-insight","tag-fed","tag-fed-rate","tag-inflation","contributors-categories-benzinga"],"pp_statuses_selecting_workflow":false,"pp_workflow_action":"current","pp_status_selection":"publish","acf":[],"yoast_head":"<!-- This site is optimized with the 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