Core PCE for December has continued to moderate, printing at 4.4% y/y. This is down from 4.7% y/y in November. The series has charted a lower peak (LP) followed by a lower trough (LT). This is a downtrend. Its momentum is defined by the green down-sloping trend line.
Core PCE is the Fed's preferred measure of inflation. The trend will please the Fed and contribute to the Fed pivot scenario, given the recent pressure on economic data.
The US 2-year yield (hourly chart) declined following the release, breaking through the black up-sloping trend line. If it maintains below, it will suggest a waning momentum in the yield.
The 2-year is a good proxy for Fed policy and it will be important to monitor it as we head towards the Fed rate decision on Wednesday.
Senior Market Specialist
Russell Shor joined FXCM in October 2017 as a Senior Market Specialist. He is a certified FMVA® and has an Honours Degree in Economics from the University of South Africa. Russell is a full member of the Society of Technical Analysts in the United Kingdom. With over 20 years of financial markets experience, his analysis is of a high standard and quality.