In the European session, the main highlights are the Preliminary French and Spanish CPI figures. The market is pricing around 80% probability of another 25 bps cut at the May meeting so the data will likely influence those expectations. In the American session, the focus will switch to the Canadian GDP, and the US Core PCE and the final UMich survey.
Overall, the market will likely continue to remain choppy as we await the April 2nd reciprocal tariffs announcement. That’s really the main event and the one that will shape expectations the most.
13:30 GMT/08:30 ET – US February PCE price index
The US PCE Y/Y is
expected at 2.5% vs. 2.5% prior, while the M/M measure is seen at 0.3% vs. 0.3%
prior. The Core PCE Y/Y is expected at 2.7% vs. 2.6% prior, while the M/M
figure is seen at 0.3% vs. 0.3% prior.
Forecasters can
reliably estimate the PCE once the CPI and PPI are out, so the market already
knows what to expect. Therefore, unless we see a deviation from the expected
numbers, it shouldn’t affect the current market’s pricing. Note that for the Core PCE the numbers could get rounded up higher even though the change might be very small.
For example, the Core PCE YoY is expected at 2.75%, so even a 2.76% figure could get rounded up to 2.8%. In such a case, I don’t expect the market to freak out. The focus should be on April 2nd anyways.
US Core PCE YoY
Central bank speakers:
- 08:30 GMT/04:30 ET – ECB’s de Guindos (neutral – voter)
- 16:15 GMT/12:15 ET – Fed’s Barr (neutral – voter)
- 19:30 GMT/15:30 ET – Fed’s Bostic (neutral – non voter)
