- Dallas Fed PCE: 1.9% vs 2.2% expected.
- Prior revised to 1.9% from 2.2%.
The August Dallas Fed PCE inflation reading came in at 1.9%, below the 2.2% expected and equal to the revised prior reading of 1.9% (was 2.2%), according to the supplied release table.
The softer reading points toward easing underlying inflation pressures.
Quick analysis: The downside surprise could ease pressure on the Fed to raise rates but there is still work to do.
Earlier today, the August Personal Consumption Expenditures report also showed inflation below expectations but numbers that were higher than the Dallas numbers:
- Core PCE y/y: 3.0% vs 3.3% expected. Prior 3.3%.
- Core PCE m/m: +0.2% vs +0.3% expected. Prior +0.2%.
- Headline PCE y/y: 3.4% vs 3.7% expected. Prior 3.7%.
- Headline PCE m/m: +0.3% vs +0.4% expected. Prior +0.2%.
Softer inflation normally weighs on Treasury yields and the US dollar while supporting equities, although one reading alone does not settle the policy outlook.
What this report measures: The Dallas Fed’s trimmed mean personal consumption expenditures (PCE) inflation measure removes the largest price increases and decreases to help identify the underlying inflation trend. The Dallas Fed publishes one-month annualized, six-month annualized and 12-month readings, which traders monitor alongside headline and core PCE inflation.
This article was written by Greg Michalowski at investinglive.com.