🇺🇸Cable FX Macro Weekly Note: U.S. Dec. PCE Deflator

**As seen in Risk In The Week report 01/20/23, cablefxm.co.uk/reports

November core PCE deflator increased by 0.2% M/m and 4.7% Y/y, the monthly figure was in line with estimates. Core PCE has seen a second consecutive month of declines, and it is projected to fall further in December, if the consensus is correct, the Fed’s preferred measure of inflation would fall to the lowest level since October 2021. As a reminder, the Fed is currently forecasting the figure to fall to 3.50% in 2023 and to 2.50% next year, the latter would be near the Fed’s target of 2.0%. The desk at Wells Fargo Securities expect the PCE deflator to remain unchanged in December, they add that this would point to a 0.2% drop in real spending. They see a fall in goods spending to lead consumption lower, while services demand remains positive through 2023. On disposable income, Wells Fargo says we have seen solid gains in household’s purchasing power.