**Stocks Show Resilience After PCE and Consumer Data, FOMC in Focus**
*Adapted and expanded from the article by Ross J. Burland, FXStreet*
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Global financial markets are closing the week on a positive note, with stocks demonstrating remarkable stability in the wake of the latest US economic data releases and cautious market sentiment ahead of the upcoming Federal Open Market Committee (FOMC) policy meeting. Investors are digesting disinflationary signals from the US Personal Consumption Expenditure (PCE) index as well as a series of modest consumer indicators. This mix of data is shaping expectations for the Federal Reserve’s next moves, while also highlighting undercurrents in the global equities landscape.
**Key Takeaways at a Glance:**
– Major US stock indices recover after fluctuating on economic releases
– PCE data reinforce the narrative of abating inflationary pressures
– Consumer sentiment data print below consensus forecasts
– Treasury yields fall, supporting valuations across risk assets
– Investors eye December FOMC for hints about future rate cuts
– Global equities show resilience despite uncertainties
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### US PCE Data: Fresh Disinflation Evidence
The Personal Consumption Expenditures (PCE) price index remains one of the Federal Reserve’s preferred inflation gauges due to its broad comprehensive coverage and ability to signal shifts in consumer behavior. The latest figures released showed that:
– The core PCE price index (excluding food and energy) rose by 0.1% in November, meeting market expectations
– On a year-over-year basis, core PCE rose 3.2%, matching consensus and indicating further progress on cooling inflation
– The headline PCE inflation index also rose 0.1% for the month, marking a slight deceleration from prior months
– Annualized headline PCE was up 2.6%, a figure that moves closer to the Fed’s 2% long-term inflation target
These results reinforced the notion that inflation is continuing to trend downward, though not without some persistence in certain subcomponents. The “supercore” measure, which strips out both food, energy, and housing, offered additional confirmation that the disinflation process is gaining traction.
**What This Means for Markets:**
– Lower inflation readings encourage expectations that the Federal Reserve will end its rate-hiking cycle
– Market-based probabilities for a rate cut have increased for the first half of next year
– Equity investors see potential upside as interest rate pressures diminish and valuations become more attractive
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### Consumer Data: Spending Slows, Sentiment Softens
In parallel with inflation readings, the US released several notable consumer data points:
– Personal income rose a modest 0.4% in November, suggesting a steady but unspectacular pace of growth
– Consumer spending increased just 0.2%, missing consensus expectations for a larger uptick and marking a cooling from recent robust trends
– The University of Michigan’s final December Consumer Sentiment index fell to
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