**: CBN.
The U.S. core PCE** index increased by 04%, an increase of 28%, unchanged from expectations. The data reflects a continued shift in consumption from goods to services as the economy normalizes.
On February 29, local time, the latest data released by the U.S. Department of Commerce showed that the U.S. personal consumption expenditures (PCE)** index increased by 0.0 month-on-month in January3%, up 2 percent year-on-year4%, unchanged from expectations.
Among them, the service ** increased by 06%, a year-on-year increase of 39%；Commodities** decreased by 02%, down 05%。Food**month-on-month**0.5%, year-on-year **14%；Energy** decreased by 1 month-on-month4%, down 49%。Excluding volatile food and energy**, the US core PCE** index rose 04%, up 28%, in line with expectations.
The January PCE data reflects a continued shift in consumption from goods to services as the economy normalizes.
In addition, personal income increased by 233 in JanuaryUS$700 million, an increase of 1% sequentially, far exceeding market expectations of 03%。
After the release of the data, the U.S. stock market was pre-market**. As of 9 a.m. ET, the Dow Jones ***011%, NASDAQ ***058%, S&P 500 ***031%。U.S. Treasury yields are lower. The yield on the 10-year Treasury note fell nearly 2 basis points to 4258%。
According to the CME Fed Watch tool, the market currently expects the Fed to remain on hold in March and May with a probability of 975% and 801%。The probability of a 25 basis point rate cut in June is 495%。
Craig Johnson, chief market technical analyst at Piper Sandler, told CBN that the Fed is doing the right thing and inflationary pressures are declining, "but if inflation data overheats again, it means that rate cuts could be delayed until the second half of the year." This is difficult for the market to accept, because from a technical point of view, the market is ready for a rate cut. Johnson expects the market to be 10% first and then 10%, "so inflation data could be a good reason for the market to take profits." "At the same time, the second reading of GDP in the fourth quarter of last year was slightly weaker, falling to 32%, less than 33%。
Although U.S. inflation has fallen from a more than 40-year high, the previously released January CPI data exceeded expectations, renewing market nervousness. Several Feds** then said they should see more evidence of easing inflation before cutting interest rates. Mark Zandi, chief economist at Moody's Analytics, believes that if the Fed continues to be hawkish on tightening policy, it could threaten the economic expansion.
In response to the current price environment in the United States, Johnson believes that inflation is still too high, but it will take time to reduce inflation. "Looking at the economic data, the cooling of inflation is underway, but not fast enough for Wall Street. He analyzed. Johnson expects to be more cautious than the consensus expectations of Wall Street institutions for the Fed to cut interest rates. He expects the Fed to cut rates 1 to 2 times in 2024, with the first cut coming in June or July, and the second likely after ***.
Tim Anderson, a trader at the New York Stock Exchange, told CBN reporters that the Fed is expected to cut interest rates for the first time in June and twice in the second half of the year.
In addition, Johnson also expects that from a historical perspective, more small- and mid-cap** will improve as the Fed begins to cut interest rates, and that some of the large technology sectors will start to lag other stocks. For example, only four of the "Big Seven" of the U.S. stock market are still performing significantly, but Aplhabet, Tesla and Apple are no longer contributing to the rally.