Watch out for a hot print in the PCE report today

The US personal income and consumption report is due at 10 am and the GDP report offers some insights into what is coming.

The first hint is on inflation and those numbers were hot in the GDP report, which means upside risks. Guy Lebas from Janney sees that rolling in at +0.4% in light of GDP, which is well-above the +0.1% expected and is likely to give the Fed a headache. It should also keep the y/y reading closer to 3% than the 2.6% expected.

On the consumption side there is some good news. Adjusted consumption is forecast at +0.5% but the consumer spending number in the GDP report was at +1.8% compared to +1.2% expected.

I’d imagine that some of this is already priced into the market but a hot inflation number could raise some very tough questions about the 125 bps of easing priced in for the next 12 months.

This article was written by Adam Button at www.forexlive.com.