Breakfast Bites - US PCE in the bag after yesterday's lower final GDP

Rise and shine everyone.

The big news today is the release of the last US PCE data for the year. Although at this stage, I’m not too sure how big this news still is, given that the Fed has all but confirmed a pivot. Moreover, we saw the numbers come in with the final GDP print yesterday.

The Final GDP Q/Q growth was revised down from 5.2% in the second estimate to 4.9% as the final print. The major reason for the change was the deceleration in the PCE numbers. Personal consumption accounts for almost 68% of quarterly GDP.

The forecast for this month’s PCE number is 2.8% down from 3% and Core PCE is 3.3% down from 3.5%. We expect that the Fed will only start cutting rates once we are well below the 3% mark for core PCE. While we may reach there by Q1, 2024, we believe the Fed will want to see that the data remains below 3% for a few months before they can start normalizing policy.

US equity futures are in the red right now after closing higher yesterday. Yields are also lower across the curve. The US Dollar has pulled back to 101.5 while Oil and Gold are on the rise. Bitcoin is off its best levels, now at 43,724.

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