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PCE Price Index reveals latest data suggests inflation slowing but elevated

Commentaries & Views

The BEA (Bureau of Economic Analysis) released the Personal Consumption Expenditures (PCE) for March indicating that inflation remains elevated but its advance is slowing down on a month-over-month and year-over-year basis.

The report was released at 830 EDT this morning and began with personal incomes and outlays for March 2023 saying that, "Personal income increased $67.9 billion (0.3 percent) in March"

The PCE only grew 0.1% MoM and 4.2% YoY. That is a 0.8% decrease from the year-over-year numbers in February which came in at 5% and well below economist's expectations expected to see inflation come in at an annual pace of 4.6%.

The core PCE rose 0.3% month over month and 4.6% year-over-year down 0.1% from 4.7% in February. The core PCE excludes energy and food costs and is the preferred measure of inflation by the Federal Reserve. Economists had anticipated that the core PCE would be lower year-over-year with a reading of 4.5%.

This report slightly increased the probability by the CME's FedWatch tool that the Federal Reserve will implement its 10th consecutive rate hike by raising rates by ¼% at the FOMC meeting next week. The probability of a ¼% rate hike rose from 83.9% yesterday to 85% today.

This report had little impact on gold futures pricing. As of 5:25 PM EDT, gold futures basis the most active June 2023 contract is up $0.40 or +0.02% and fixed at $1999.40. The dollar also had fractional gains up 0.18% with the index currently fixed at 101.43.

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Wishing you as always good trading,

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