Traders Brace For Fed's Favorite Inflation Report Friday: July Price Pressures Expected To Edge Higher
Portfolio Pulse from Piero Cingari
The upcoming PCE inflation report, a key indicator for the Federal Reserve, is expected to show a slight increase in inflation rates for July. This report could influence market expectations for a rate cut in September. A higher-than-expected report may boost the U.S. dollar and Treasury yields, while a lower-than-expected report could benefit equities.

August 29, 2024 | 12:28 pm
News sentiment analysis
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NEGATIVE IMPACT
The iShares 20+ Year Treasury Bond ETF (TLT) might decline if the PCE report indicates higher inflation, as this could lead to rising Treasury yields.
Higher inflation expectations could lead to increased Treasury yields, negatively impacting TLT, which tracks long-term Treasury bonds.
CONFIDENCE 90
IMPORTANCE 70
RELEVANCE 80
POSITIVE IMPACT
The iShares Russell 2000 ETF (IWM) might benefit from a lower-than-expected PCE report, as it would support the case for rate cuts.
A lower-than-expected PCE report would likely reinforce rate cut expectations, benefiting small-cap stocks tracked by IWM.
CONFIDENCE 85
IMPORTANCE 70
RELEVANCE 80
POSITIVE IMPACT
The Invesco QQQ Trust (QQQ) is likely to gain if the PCE report is lower than expected, as this would support rate cut expectations.
A lower-than-expected PCE report would increase the likelihood of rate cuts, benefiting tech-heavy indices like QQQ.
CONFIDENCE 85
IMPORTANCE 70
RELEVANCE 80
POSITIVE IMPACT
The SPDR S&P 500 ETF Trust (SPY) could benefit if the PCE report is lower than expected, reinforcing the likelihood of rate cuts.
A lower-than-expected PCE report would support the case for rate cuts, potentially boosting equities like SPY.
CONFIDENCE 85
IMPORTANCE 70
RELEVANCE 80
POSITIVE IMPACT
The Invesco DB USD Index Bullish Fund ETF (UUP) may see a rise if the PCE report shows higher-than-expected inflation, as this could strengthen the U.S. dollar.
A higher-than-expected PCE report would suggest stronger inflation, potentially leading to a stronger U.S. dollar, which UUP tracks.
CONFIDENCE 90
IMPORTANCE 70
RELEVANCE 80