US: Headline PCE to slip back to 1.7% y/y - TDS

Analysts at TDS suggest that markets begin a data and event packed week with December PCE and markets expect headline PCE to slip back to 1.7% y/y, with the core PCE deflator (the Fed's inflation gauge) rising to 1.6% y/y.

Key Quotes

“We see downside risk to the latter, expecting a stable 1.5% y/y as presaged by the advance BEA quarterly data. The market looks for personal spending to advance 0.4% with personal income up 0.3%; we see a stronger 0.5% increase in personal spending with upward revisions.”

“Canada: Round six of NAFTA renegotiations wrap in Montreal. Watch for the tone of closing statements from each country, particularly from the U.S. who is likely to maintain a hardline stance and frustration with lack of headway, potentially reigniting concerns over a U.S. withdrawal.”