US inflation expectations renew multi-day top ahead of US Core PCE Price Index

As markets await the Federal Reserve’s (Fed) preferred inflation gauge, the US inflation expectations per the 10-year and 5-year breakeven inflation rates from the St. Louis Federal Reserve (FRED) renew the multi-day high.

That said, the 10-year inflation expectations per the aforementioned approach refreshed the seven-week high to 2.33% on Thursday. On the same line, the five-year counterpart also rose to the fresh multi-day top, around the highest levels since December 30 while flashing 2.32% by the end of Thursday’s North American session.

It’s worth noting that the upbeat inflation precursors contrast with the mixed US data published the previous day, which in turn highlights today’s Fed’s preferred inflation gauge, namely Core Personal Consumption Expenditures (PCE) - Price Index for December.

That said, the US Bureau of Economic Analysis (BEA) released the first estimate of the US fourth quarter (Q4) Gross Domestic Product on Thursday that marked an annualized growth rate of 2.9% versus 2.6% expected and 3.2% prior. On the same line, the Durable Goods Orders jumped 5.6% in December versus 2.5% market forecast and -1.7% upwardly revised prior. It should be noted, however, that the growth of Personal Consumption Expenditures Prices weakened to 3.2% QoQ in Q4 compared to 4.3% marked forecast and prior readings. Further, Core Personal Consumption Expenditures eased to 3.9% QoQ for Q4 from 4.7% previous readings, versus 5.3% expected.

Moving on, the US Core PCE Price Index will be important for the market players as a dip in the inflation pressure ease the hawkish Fed concerns and favor the risk-on mood, which in turn exerts additional downside pressure on the US Dollar.

Also read: US Dollar Index pares US GDP inspired gains ahead of Fed’s favorite inflation gauge