Core PCE MoM missed estimates, with 0.2% vs 0.3% expected, showing that underlying inflation is coming down and increasing hopes for an early rate cut. The initial reaction is risk-on, being favorable to Gold and stocks and unfavorable to the US Dollar.
It is essential to note that end-of-month action is in play.
Live coverage of US core PCE.
Why core PCE matters for markets
The Federal Reserve (Fed) is the world's most influential central bank, and it has two mandates – full employment and price stability. When it comes to the latter, the Fed aims for 2% annual core PCE. The methodology used in the PCE report is considered more up-to-date with consumer preferences than the CPI, which is released earlier.
Core PCE excludes more volatile items such as energy and food, which are influenced by global developments. The Fed's interest rate have more impact on investments and savings, which are reflected in prices of services, housing and durable goods.
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