26 Jun 2014
US PCE inflation likely to rise further over coming months - ING
FXStreet (Łódź) - Following the release of US PCE numbers today, which showed a 1.8%YoY increase in May, Rob Carnell from ING suggests that the headline indicator could climb more in the coming months, towards the Fed's 2% target.
Key quotes
"In the next few months, we should see PCE inflation touch, and then exceed 2.0%, and around the time that this happens, the unemployment rate will have reached close to 6.0% or even slightly below, and QE will be on the verge of ending."
"At this time, markets will be thinking hard about what comes next, and the FOMC may even have begun to match this market sentiment change with some more consistent rhetoric of their own."
"This opens up the possibility of a small, but discrete step increase in US Treasury yields, and anticipation of faster Fed funds tightening, as previous forward guidance is jettisoned for something more consistent with the robust macro backdrop."
"Dampening any reaction to this data today, personal spending data for May was somewhat weaker than expected, at only 0.2%mom. If we are not to have to revise our full-year GDP figures much lower in the months ahead, following what was an awful 1QGDP result, this pace of spending growth will be insufficient."
Key quotes
"In the next few months, we should see PCE inflation touch, and then exceed 2.0%, and around the time that this happens, the unemployment rate will have reached close to 6.0% or even slightly below, and QE will be on the verge of ending."
"At this time, markets will be thinking hard about what comes next, and the FOMC may even have begun to match this market sentiment change with some more consistent rhetoric of their own."
"This opens up the possibility of a small, but discrete step increase in US Treasury yields, and anticipation of faster Fed funds tightening, as previous forward guidance is jettisoned for something more consistent with the robust macro backdrop."
"Dampening any reaction to this data today, personal spending data for May was somewhat weaker than expected, at only 0.2%mom. If we are not to have to revise our full-year GDP figures much lower in the months ahead, following what was an awful 1QGDP result, this pace of spending growth will be insufficient."