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(Reuters) – US prices rose in December, while consumer spending rose, suggesting that the Federal Reserve could delay the interest rates this year.
The price index of the personal consumption expenditure (PCE) rose by 0.3% last month after a non -revised profit of 0.1% in November, the Commerce department said on Friday. Economists interviewed by Reuters had predicted the PCE price index by 0.3%. In the 12 months to December, the PCE price index rose 2.6% after increasing 2.4% in November.
The US Central Bank follows the PCE price measures for monetary policy.
Market reaction:
Stocks: S&P 500 Emini Futures held on to an increase of 0.48%, pointing to a solid open on Wall Street
Bonds: US Treasury 10-year yield was not moved to 4,523% and the efficiency of two years ticked 4,207%
Forex: the dollar index retained, an increase of 0.157%
Comments:
Peter Cardillo, Chief Market Economist, Spartan Capital Securities, New York
“In principle on a monthly basis, inflation was a bit higher than I expected. In a year to year it was a bit higher, but the core, which is actually the key, was in principle unchanged on an annual basis.
“In short, it doesn’t really change the needle. It is a mixed report and plays in the hands of the FED in the sense that the Fed needs more confirmation that inflation is going in the right direction.
“The bottom line is that this report will not have a major impact on the markets in both directions. The tariff situation is what is in the front line and you just have to wait … we can get a surprise, and it might be slightly less than 25 % that Trump spoke about. “
Gennadiy Goldberg, head of the American rates strategy, TD Securities, New York
“It is an interesting set of data for markets. The very strong data of the expenditure for personal income continues to suggest that the consumer remains resilient. At the same time, you have the inflationary pressure that continues to fade. Before it ends, it was 0.156% (core PCE -increase in the month), so it is actually a pretty positive number, I would say, for the rates market. It really underlines that the Fed can keep the rates on hold, at least for the next meeting or as this type of data, and we actually think that the Fed can keep the rates for longer, all the way through the first half of The year. “
Kyle Chapman, FX Markets Analyst, Ballinger Group, London
“The data point to the trend for American rates that still point down, but it also confirms that the FED is right to start an extensive break. Although 2.8% is clearly well above the goal, we will see some quick profit on the year on an annual basis in the coming months, because the peak fades from the calculation in the first quarter last year.
