Analysts at Nomura offered their review of the PCE data that beat expectations and their GDP tracking update.
Key Quotes:
“The July Core PCE price index, the Fed’s preferred measure of underlying inflation trends, rose 0.2% (0.156%) m-o-m in July (Consensus:+0.2%, Nomura:+0.192%). The 0.156% m-o-m increase was slightly lower than our expectation, but the June reading was revised up to +0.121% from a preliminary figure of +0.108%. As a result, y-o-y core PCE inflation came in close to our forecast. The 12-month change in the core PCE price index inched up to 2.0% (1.984%) in July from 1.9% (1.923%) in the previous month (Consensus:2.0%, Nomura: 1.998%). On a y-o-y basis, core PCE inflation has drifted within a narrow range of 1.9%-2.0% since March this year, suggesting the inflation trend remains quite stable after base effects pushed it up earlier this year.
GDP tracking update:
Nominal spending was slightly higher than we expected in today’s personal spending release, while the headline PCE deflator was slightly weaker, implying more real Q3 spending. Altogether we raised our Q3 GDP tracking estimate 0.1pp to 3.2% q-o-q saar.”
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