As important as Friday’s Personal Consumption Expenditure (PCE) inflation data will be for the Fed, analysts have noted comments by rate setters, stating that more than a single month’s worth of evidence will be needed to inform monetary policy.

An economists’ poll predicted the key PCE core deflator reading rising 0.3% m/m and 2.7% y/y, compared to March’s 0.3% and 2.7% prints respectively. The headline PCE deflator is forecast to have risen by 0.3% and 2.7% respectively.

SocGen’s Stephen Gallagher noted that the focus was increasingly on the unrounded print in order to calibrate the risks. “We have made our early calculations of 0.3% for both the headline and the core measure. More specifically, we forecast a 0.27% increase for the headline and a 0.28% increase for the core PCE.” (LiveSquawk - Continue Reading)

Consumer price growth in the euro area rebounded this month, raising questions about how the European Central Bank will move forward with its plans to loosen monetary policy.

After last month’s sideways shift in inflation, benchmark consumer price growth in the euro area rose to an annual rate of 2.6%, according to preliminary data from the EU statistics office Eurostat, putting this month’s reading over the market forecast of 2.5% and the 2.4% reported in April.

The monthly rate dropped to 0.2%, which matched forecasts and was well below the previous mark of 0.6%. Eurostat said core inflation grew to to 2.9% y/y from 2.7%, which was also the market expectation. It noted that prices for services were up 4.1% on the year. (LiveSquawk - Continue Reading) 

The impact of former President Donald Trump’s historic guilty verdict has yet to set in on Wall Street. From round-the-clock currencies to after-hours equity trading, most financial assets — aside from shares in Trump Media & Technology Group — were largely stable after a New York jury found Trump guilty on all 34 felony counts.

But for traders, the question now is how the decision will impact markets that are already starting to prepare for the 2024 US elections — in which Trump is all but certain to face off with President Joe Biden.

“The stock market has a history of tuning out domestic political turmoil,” said Ed Yardeni, founder of Yardeni Research. “However, the political climate is clearly going to be even more volatile after the Trump verdict, which could increase volatility in the stock market.” (BBG - Continue Reading) 

UK assets have mostly traded sideways since the announcement of the July 4 election, but that hasn’t stopped market participants from becoming more positive, with the opposition Labour Party far ahead in the polls.

With London-listed stocks hovering near record highs and the pound holding firm against the dollar, strategists and fund managers expect that a new government would bring stability and lift a political overhang which has weighed on markets for years.

“Markets are fairly relaxed about the election because the outcome seems near certain — a win for Labour,” said James Athey, a portfolio manager at Marlborough Investment Management Ltd. (BBG - Continue Reading)