Market Movers
Today, NY Fed president Dudley, who is an influential member of the FOMC, will give his view on monetary policy followed by Chicago Fed President Evans later in the day and San Francisco Fed President Williams. We already know that Williams saw the September decision as a 'close call' but we expect Evans to strike a more dovish tone. Most important, however, are the comments from Dudley. Last week, FOMC chair Yellen clarified that she is also in the camp seeing a rate hike later this year barring any new negative shocks to inflation and growth.
We expect the US core PCE price index for August to increase 0.1% m/m taking annual core inflation to 1.3% as the strong USD and low commodity prices continue to restrain core inflation in the US. Headline PCE is likely to be flat on the month with annual inflation a modest 0.3%. In terms of spending, solid retail and auto sales data suggest that personal spending increased a healthy 0.4% m/m. Personal income is supported by continued strong job growth and we expect an 0.5% m/m increase in August.
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