Inflation on the Rise: PCE Price Index Jumps 0.6% in January, 10-Year Yield Moves Higher
By The Personal Consumption Expenditures (PCE) price index — the Federal Reserve's preferred assessment of how quickly prices are rising across the economy — rose 0.6% in January and 5.4% from the previous year, according to data released on Friday. Excluding the components of food and energy which can fluctuate greatly, core prices increased 0.6% in the month and 4.7% compared to the same month last year.[0]
The release of the personal consumption expenditure (PCE) price index early Friday showed the cost of U.S. goods and services jumped 0.6% in January, its biggest rise since last summer. This is another sign that stubbornly high inflation is taking its time to return to low prepandemic levels.[1]
The 10-year U.S. Treasury yield ticked lower to 3.87% on Thursday, falling for a second consecutive session.[2] However, the 10-year yield moved higher to 3.94% this morning — on track for a fifth-straight weekly advance — after the hot inflation report.[2]
At 9:51 a.m.[3] EST, the S&P 500 (SP500) was down 1.6%, the Nasdaq Composite (COMP.IND) was off 1.7%, and the Nasdaq 100 (NDX) was down 1.4%.[4] The Dow (DJI) was seeing the most downward pressure, off 2%.[4]
Other important economic readings are due before the bell. It is anticipated that personal income in January will increase by 1.2% compared to the preceding month, whereas the same metric had only grown by 0.2% in December.[3] Consumer spending is forecasted to increase by 1.4% in January, up from a decline of 0.2% the prior month.[3]
The other data scheduled for release today at 10 a.m. EST is the existing home sales report for January.[5] The sales of existing homes increased by 2% from the previous month, totaling 4.10 million units.[6]
Minutes from the Federal Reserve's last meeting on Jan. 31 and Feb. 1 published on Wednesday showed that while there were signs of inflation easing, central bank officials were still concerned about rising prices.[7] It was also indicated that additional increases in interest rates are probable.[8]
0. “Stock market news today: Stocks slide after hotter-than-expected key inflation print” Yahoo News, 24 Feb. 2023, https://news.yahoo.com/stock-market-news-today-february-24-2023-104349492.html
1. “Dow falls more than 300 points after Fed’s favorite inflation gauge runs hotter than expected” MarketWatch, 24 Feb. 2023, https://www.marketwatch.com/story/u-s-stock-futures-weaken-ahead-of-key-inflation-data-efb982a2
2. “Dow Jones Dives 400 Points On Hot Inflation Report; Tesla Stock Skids” Investor's Business Daily, 24 Feb. 2023, https://www.investors.com/market-trend/stock-market-today/dow-jones-futures-fall-200-points-ahead-of-key-inflation-report/
3. “Stock Market News Today: Stocks in the Red after Hot Inflation Report” TipRanks, 24 Feb. 2023, https://www.tipranks.com/news/stock-market-news-today-futures-trend-down-ahead-of-key-economic-data
4. “Nasdaq, S&P, Dow fall on hot PCE inflation data” msnNOW, 24 Feb. 2023, https://www.msn.com/en-us/money/markets/nasdaq-sandp-dow-fall-on-hot-pce-inflation-data/ar-AA17T1gw
5. “‘FOMO’ Rally Over: Dow Falls 700 Points—Biggest Plunge Of 2023” Forbes, 21 Feb. 2023, https://www.forbes.com/sites/dereksaul/2023/02/21/fomo-rally-over-dow-falls-600-points-biggest-plunge-of-2023/
6. “Nasdaq, S&P 500 Futures Slump As Traders Weigh-In Retail Earnings, Uncertain Economic Backdrop – Invesco” Benzinga, 21 Feb. 2023, https://www.benzinga.com/news/earnings/23/02/30981796/nasdaq-s-p-500-futures-slump-as-traders-weigh-in-retail-earnings-uncertain-economic-backdrop
7. “Treasury yields dip as investors assess Fed policy outlook” CNBC, 23 Feb. 2023, https://www.cnbc.com/2023/02/23/us-treasury-yields-investors-assess-fed-policy-outlook.html
8. “Treasury yields rise ahead of key inflation data” CNBC, 24 Feb. 2023, https://www.cnbc.com/2023/02/24/treasury-yields-little-changed-as-investors-assess-fed-minutes-data.html
