December US PCE data coming up next but we have a hint on how it will go

<p>Happy Friday.</p><p>The US PCE report at 8:30 am ET and pending home sales at 10 am are on the economic calendar today.</p><p>The PCE report is the big one as it's the Fed's preferred measure of inflation and it also offers other indications on consumer health. What's expected:</p><ul><li>PCE price index +2.6% y/y</li><li>Core PCE +3.0% y/y</li><li>Personal income +0.3% m/m</li><li>Personal spending +0.4% m/m</li></ul><p>A hint on the PCE price index came in yesterday's US Q4 GDP report. The GDP deflator was +1.5% annualized compared to 2.3% expected. That transposes into a couple ticks lower in the PCE price index so I'd suspect the market is priced for 2.4% or 2.5%. Anything lower than that gets awfully close to the Fed's target.</p><p>Core is more of a Fed focus at the moment though and the core number in GDP was in-line with estimates, so I don't see any kind of skew there.</p><p>For now the market is pricing in 139 bps in easing this year with March around 50/50 for the first cut.</p>

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