PCE hype now rarely matches market moves
PCE may still matter to policymakers at the Fed, but for traders looking for a genuine volatility event, CPI has been the far more reliable release.
Share this:
We’ve reached that point in the month where seemingly every second market headline is about core PCE: the Fed’s preferred inflation gauge, a potential game-changer for rates, the US dollar and risk assets.
The problem is that PCE just doesn’t generate the kind of volatility those headlines suggest. Over the past 12 months, CPI produced the largest median 30-minute move across US 2-year and 10-year Treasury yields, the dollar index, S&P 500 futures and gold.
PCE still matters for Federal Reserve policy, but by the time it arrives, economists have already pulled a lot of the useful information from CPI and PPI released earlier in the month. The mapping has become so refined that major banks are now publishing core PCE estimates to two decimal places before the official number lands.
Traders should also remember that PCE may not remain the Fed’s preferred inflation measure for long, with Chair Kevin Warsh’s task forces reviewing both the data policymakers use and the broader inflation framework.
In the video below, I look at which US inflation report actually moves markets, how that has changed over time, and why PCE may deserve a little less hype than it gets.
Open an account in minutes
Experience award-winning platforms with fast and secure execution.
Economic calendar
Web Trader platform
Our sophisticated web-based platform is packed with features.
Related articles
USD/JPY Weekly Outlook: Bulls Eye Higher Range After Historic Rate Shock
A historic US rate shock has sent USD/JPY above 160, but with intervention risks rising and few major economic catalysts ahead, AI sentiment could hold the key to the next move.
AUD/USD Outlook: Historic yield squeeze leaves Aussie bears in control
Australian bond yields have fallen below their US equivalents as the Fed's hawkish repricing gathers momentum. With the Aussie weakening broadly, technical signals suggest sellers remain in control.
Gold, EUR/USD hit 2026 lows as US yields erupt
US Treasury yields have staged one of their largest four-session increases in decades, hammering EUR/USD and gold. But while the euro's decline makes sense, gold's reaction has been extraordinary.
The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.
Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex, commodity futures, or digital assets, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to FOREX.com or GAIN Capital refer to StoneX Group Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.