US PCE inflation just printed 3.7% — slightly above the 3.6% consensus. Not a huge miss, but enough to keep the Fed hawks awake.
PCE is the Fed's preferred inflation gauge, so this matters more than CPI for rate decisions. The 0.1% overshoot isn't dramatic, but it reinforces that inflation isn't cooperating with the "mission accomplished" narrative.
What this means:
1. Rate cut expectations get pushed further out
2. Dollar strength persists
3. Risk assets (crypto, tech) face more headwinds in the near term
The Fed wants to see consistent cooling before pivoting. This print doesn't give them that comfort. Markets were pricing in cuts by mid-2024 — that timeline just got fuzzier.
Inflation is sticky. The last mile is always the hardest.
PCE is the Fed's preferred inflation gauge, so this matters more than CPI for rate decisions. The 0.1% overshoot isn't dramatic, but it reinforces that inflation isn't cooperating with the "mission accomplished" narrative.
What this means:
1. Rate cut expectations get pushed further out
2. Dollar strength persists
3. Risk assets (crypto, tech) face more headwinds in the near term
The Fed wants to see consistent cooling before pivoting. This print doesn't give them that comfort. Markets were pricing in cuts by mid-2024 — that timeline just got fuzzier.
Inflation is sticky. The last mile is always the hardest.