Watch out for a hot headline PCE number

<p>Inflation and consumption are on the agenda today with the September US PCE report coming up at the bottom of the hour. </p><p>There is good reason to think that the PCE price index will overshoot the +3.4% y/y and +0.3% m/m consensus. In yesterday's <a href="https://www.forexlive.com/news/us-q3-advance-gdp-49-vs-43-expected-20231026/" target="_blank" rel="follow">GDP report</a>, the headline deflator at 3.5% was much higher than the 2.5% expected. Assuming economists are on the same page, that should be seen in the PCE report as well.</p><p>Notably though, the more-important core PCE reading in the GDP report was slightly below the consensus. The expectation for today's PCE core is +0.3% m/m and +3.7% y/y.</p><p>Another skew could be in consumption where strong US consumer spending also helped to boost GDP. The consensus on personal spending is +0.5%.</p><p>I would think many market participants have factored all this in but — if anything — hot headline and consumption numbers should lead to USD strength, bond selling and softer equities.</p>

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