Tonight, a series of PCE price indexes in the United States that the market is concerned about will be announced. Among them, the key is the core PCE price index in August annual rate, followed by the announcement of the monthly rate of personal expenditure in the United States, the monthly rate of core PCE price index in August, and the annual rate of PCE price index in August. Affected by the decline in gasoline prices over the past period, economists expect the PCE price index to slow down annually, but the core PCE price index, which excludes food and energy, is expected to continue to rise.
What is PCE price index?
PCE refers to the personal consumption expenditure deflating index, which is an indicator to measure the changes in the prices of consumer goods and services purchased by consumers. The core PCE price index is an indicator to measure the changes in the prices of consumer goods and labor purchased by consumers other than food and energy. Like CPI, it reflects changes in consumer goods and services, but it is not based on a fixed basket, but measures the average growth of domestic personal consumer goods prices. Therefore, the PCE price index is also an important way to measure changes in the US purchase trend and inflation .
According to market estimates, the annual rate of the US PCE price index in August is expected to be 6.00%, and the previous value is 6.30%; the annual rate of the US core PCE price index in August is expected to be 4.80%, and the previous value is 4.60%; the monthly rate of personal expenditure in August is expected to be 0.20%, and the previous value is 0.1%. If the market expectation or is higher than the market expectation, it means that there is no sign of a significant cooling of inflation, especially the recent rebound in US housing prices, which is reflected in the core PCE price index in August, which may cause this index to continue to rise.
Core PCE price index has become a key data for market attention, because the recent decline in gasoline prices may cool down overall inflation, but in addition to the contribution of energy to the decline in inflation, inflation in other core commodities is still facing a severe situation, indicating that inflation returns to the target level is still being challenged. However, if the core PCE price index unexpectedly cools down in August, it will hit the dollar a lot. The subsequent rate hike is expected to cool down. Therefore, when will the inflation of core commodities turn also become an important guide for the next Fed hike policy.
Overall, if the PCE price index does not fall significantly in August, it is very likely that the market will heat up the market's expectations of the Fed's next rate hike. The dollar index may continue to be in the vision of interest rate hikes and rise again, heading straight to the level above 115, then the pressure on gold prices will continue, and other non-US currencies will also bring pressure. The release of this data may cause new fluctuations to the market, and the market fluctuations are not expected to end.
This week the market also focused on intensive speeches by Fed officials, and the market is also speculating whether the Fed will choose to raise interest rates for the fourth time to 75 basis points. On Tuesday, Chicago Fed Chairman Charles Evans said in a speech that the U.S. central bank needs to raise interest rates at least one more percentage point this year, but believes that the labor market will not enter a "recession-like" state. Minneapolis Federal Reserve Bank President Neil Kashkari believes the Fed is currently moving at a proper radical pace.
The market is currently digesting the content of officials' speeches. Combined with the expected trend of economic data, the risk of gold prices falling is still relatively high, and the US dollar still has the momentum to continue to rise.
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