Societe Generale estimates October core PCE inflation at 0.30% m/m, citing firm housing and core-goods data, with the upcoming October PPI release expected to refine the final figure.
October core CPI surprised to the upside at 0.3% m/m and Societe Generale projects core PCE around 0.30% m/m (range 0.27%-0.33%), keeping US inflation firm. Stickier inflation supports expectations of a less dovish Fed, which tends to lift the dollar. The exact core PCE print still depends on super-core dynamics pending the October PPI release.
An upside core CPI surprise at 0.3% m/m and a projected core PCE near 0.30% m/m point to persistent inflation pressure, which typically pushes Treasury yields higher as markets price less Fed easing. The pending PPI release adds uncertainty about the final PCE figure.
Societe Generale analyst Jan Groen projects October core PCE inflation to land between 0.27% and 0.33% month-on-month, with a central estimate of 0.30%. This forecast follows an upside surprise in October core CPI, which rose 0.3% m/m, signaling persistent inflationary pressures that may influence Federal Reserve policy expectations.
Firm US inflation readings make it harder for the Federal Reserve to ease policy, and higher rate expectations typically support the dollar against other currencies.
The core CPI reading of 0.3% m/m is published, but the core PCE projection of roughly 0.30% m/m is an estimate that the upcoming October PPI release will help clarify.
Persistent inflation makes investors expect the Federal Reserve to keep policy tighter for longer, which generally pushes longer-term Treasury yields up.
The October PPI release, which is expected to clarify the super-core PCE component that drives the final core PCE estimate.