ZINGER KEY POINTS
- January’s PCE report shows easing annual inflation to 2.4%, aligning with Fed’s 2% target, amid rate cut speculations.
- Personal income jumps 1%, spending growth slows; market reacts with lower yields and a slight dollar dip.
The Federal Reserve’s preferred measure of inflation – the Personal Consumption Expenditure (PCE) price index – matched expectations in January, underscoring progress in the path to the 2% inflation target.
Ahead of the release, traders had been leaning towards the likelihood of a Fed rate cut by the end of the first half.
January’s PCE Report: Key Highlights
| Measure | December 2023 | January 2024 | Expected |
|---|---|---|---|
| PCE Inflation (Year-on-Year) | 2.6% | 2.4% | 2.4% |
| PCE Inflation (Month-over-Month) | 0.2% | 0.3% | 0.3% |
| Core PCE Inflation (Year-on-Year) | 2.9% | 2.8% | 2.8% |
| Core PCE Inflation (Month-over-Month) | 0.2% | 0.4% | 0.4% |
- The annual PCE inflation rate eased slightly from 2.6% in December 2023 to 2.4% in January 2024, matching the anticipated decline to 2.4%, according to the Bureau of Economic Analysis (BEA) report released Thursday.
- On a monthly basis, the PCE price index edged up by 0.3%, picking up pace from the previous month’s 0.2% increase and meeting expectations.
- Excluding energy and food, the core PCE index saw a year-on-year surge of 2.8%, down from the 2.9% rate seen December and in line with the expected decrease to 2.8%.
- Month-over-month, the core PCE rose by 0.4%, accelerating from December’s 0.2% pace and matching the anticipated 0.4%.
- Simultaneously, personal income saw a 1% increase in January, significantly higher than previous month’s 0.3% print, well above expectations of 0.4%.
- However, personal spending only inched up by 0.2% month-over-month, marking a slowdown from the previous month’s 0.7% increase, and matching expectations.
- Weekly jobless claims inched higher from 202,000 to 215,000 for the week ending Feb. 24, slightly above the expected 210,000.
Initial market reactions: Yield, Dollar Rise
Ahead of Wall Street opening bells, yields on U.S. Treasury bonds fell across the board, with the 10-year benchmark yield falling to 4.28%, minutes after the PCE release.
The U.S. dollar index (DXY) inched lower.
—
Originally Posted February 29, 2024 – Fed’s Go-To Inflation Gauge Hits The Mark, Personal Income Surges In January
Disclosure: Benzinga
© 2022 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
Disclosure: Interactive Brokers
Information posted on IBKR Campus that is provided by third-parties does NOT constitute a recommendation that you should contract for the services of that third party. Third-party participants who contribute to IBKR Campus are independent of Interactive Brokers and Interactive Brokers does not make any representations or warranties concerning the services offered, their past or future performance, or the accuracy of the information provided by the third party. Past performance is no guarantee of future results.
This material is from Benzinga and is being posted with its permission. The views expressed in this material are solely those of the author and/or Benzinga and Interactive Brokers is not endorsing or recommending any investment or trading discussed in the material. This material is not and should not be construed as an offer to buy or sell any security. It should not be construed as research or investment advice or a recommendation to buy, sell or hold any security or commodity. This material does not and is not intended to take into account the particular financial conditions, investment objectives or requirements of individual customers. Before acting on this material, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice.
Join The Conversation
If you have a general question, it may already be covered in our FAQs. If you have an account-specific question or concern, please reach out to Client Services.