“If you have built castles in the air, your work need not be lost; that is where they should be. Now put the foundations under them.” – Henry David Thoreau ||
Hello everyone, I hope you’re all doing well! I truly do not understand how it got to be Thursday so fast.
I apologize, yet again I have to skip the audio recording, I’m not at my desk this morning.
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IN THIS NEWSLETTER:
Inflation day tomorrow
Upcoming catalysts: Hong Kong, SAB 121 and more…
Venezuela and stablecoins
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WHAT I’M WATCHING:
Inflation day tomorrow
With the preliminary US Q1 GDP growth figures dropping today (I wrote about this yesterday), tomorrow’s economic data is potentially even more significant. It’s time for the monthly circus around the Fed’s preferred inflation gauge: growth in the Personal Consumption Expenditure (PCE) index.
March’s data is expected to remain stubborn. The consensus estimates for core index (ex-food and energy) and the headline index growth are 0.3%, the same as in February. This would push the three-month annualized rate up to 4.0% – double the Fed’s official target.
(chart via Bloomberg)
Year-on-year core PCE inflation is expected to slow down slightly, from 2.8% to 2.6% – although the Cleveland Fed’s Inflation Now model (not a forecast, a real-time estimate based on economic data) suggests it could be slightly higher, at 2.74%. The year-on-year headline index growth is expected to accelerate from 2.5% to 2.6%.
Since the PCE growth is derived from data already released with the PPI and CPI numbers, the Cleveland Fed’s model tends to be relatively accurate.
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