Announced this morning, the PCE Deflator increased 0.3% in December, as expected, and was up 2.6% on an annual basis. The Core PCE Deflator, which excludes food and energy prices and is closely monitored by the Federal Reserve for policy decisions, increased 0.2% in December, also as expected. Core rates grew 2.8% on an annual basis, the same as the previous month’s annual figure.
Meanwhile, Personal Income grew 0.4% in December, as expected. Personal Spending grew 0.7% above expectations and is one tenth higher than the previous month’s revised figure. The personal savings rate as a percentage of disposable income was 3.8%, which was slightly less than previous months.
Overall, PCE inflation measures came in as expected in December. The annual figure for the core rate remains sticky, at 2.8%, which is the same as in previous months and still above the Federal Reserve’s 2% target. Meanwhile, personal income grew in December as expected while spending was above expectations with personal savings slightly less than in the past 6 months; both indicate that consumers remain active and are spending money in the economy. With the announcement of possible tariffs being put in place for Canada and Mexico, this morning’s data points suggest the Federal Reserve is likely on hold with adjustments to monetary policy for the time being.
In all, the yield on the 10-year US Treasury initially ticks slightly higher following the PCE data release but is now little changed and equities are higher as we head into the market open.
This material is intended to be for informational purposes only and is intended for current or prospective clients of Argent Trust Company. This information is obtained from sources believed to be reliable, and its accuracy and completeness are not guaranteed. Information does not constitute a recommendation of any investment strategy, is not intended as investment advice, and does not take into account all the circumstances of each investor. Forward-looking assumptions are Argent Trust Company’s current estimates or expectations of future events or future results based on proprietary research and should not be construed as an estimate or promise of results that a portfolio may achieve. Actual results could differ materially from the results indicated by this information. Investments can go down as well as up. Past performance is not a reliable indicator of future results.
