US next week key events: PCE core inflation and Fed talk - Danske Bank

According to analysts from Danske Bank, in the US, there are several important data releases over the coming two weeks that include the PCE core inflation on Thursday and the following week, the March jobs report. 

Key Quotes: 

“PCE core inflation for February is due for release on Thursday. CPI core came in at 0.2% m/m in February and, therefore, we expect PCE core inflation to come in at 0.15% m/m, which translates into 1.5% y/y, unchanged from January. Normally, there is some noise in the data, so we do not think we should read too much into the stronger-than-expected numbers from December and January. Still, we think there are upside risks for core inflation because of the tax reform but it will take time for it to materialise.”

“Next week also brings the personal spending numbers for February. Retail sales fell for the third month in a row in February which is surprising as consumer confidence is extremely high. This points to a slowdown in consumer spending in Q1 but overall we remain positive on private consumption due to the high degree of optimism among others.”

“After the FOMC meeting on Wednesday, a lot of Fed members are due to speak in coming weeks, which should give us further insight into who expects three and who expects four hikes this year.”

“The following week brings the labour market report for March, when focus will once again be on average hourly earnings. Overall, the labour market has been in good shape, which we expect to continue. Average hourly earnings rose by only 0.1% m/m in February (2.6% y/y). We estimate average hourly earnings increased by 0.2% in line with the recent trend, which would translate into annual wage growth of 2.7% y/y. Hence, the underlying inflationary pressure still seems fairly moderate. The week after Easter also brings the ISM manufacturing index for March.”