Fed's Favorite Inflation Gauge Cools More Than Expected, Cementing Rate Cut Expectations For 2024
Portfolio Pulse from Piero Cingari
The Federal Reserve's preferred inflation gauge, the Personal Consumption Expenditure (PCE) index, showed a cooling in inflation more than expected, with the headline PCE at 2.6% year-on-year and core PCE at 3.2%. This has reinforced expectations of interest rate cuts in 2024. The Invesco DB USD Index Bullish Fund ETF (UUP) saw a slight decline following the PCE data release.
December 22, 2023 | 1:34 pm
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The Invesco DB USD Index Bullish Fund ETF (UUP) experienced a slight decline after the release of the PCE inflation data, which was lower than expected.
The PCE data is a key indicator of inflation and has a direct impact on the Federal Reserve's interest rate decisions. Lower-than-expected inflation typically leads to a weaker dollar as it increases the likelihood of rate cuts, which in turn can negatively affect the value of dollar index funds like UUP in the short term.
CONFIDENCE 90
IMPORTANCE 70
RELEVANCE 80