Fed’s Preferred Inflation Gauge: What’s Ahead This Week

The week ahead features several key events for investors to monitor. October’s Personal Consumption Expenditures (PCE) index, the Federal Reserve’s preferred inflation measure, will take center stage on the economic calendar. Updates on third-quarter GDP growth and housing activity will also provide insights. Meanwhile, earnings reports from major names like Zoom, Dell, Best Buy, CrowdStrike, and Macy’s are expected to capture attention.

The Thanksgiving holiday means markets will close on Thursday, with a shortened session on Friday ending at 1 p.m. ET.

Federal Reserve Governor Michelle Bowman has voiced caution, noting that progress toward the Fed’s 2% inflation goal has “stalled” recently. Economists anticipate October’s “core” PCE to show a slight increase to 2.8% annually, up from 2.7% in September. Month-over-month growth is expected to hold steady at 0.3%.

Bank of America analysts suggest that if the PCE data aligns with expectations, the Fed may reassess its monetary policy stance. While a December rate cut remains possible, ongoing inflation and resilient economic activity could signal a shallower easing cycle ahead.

Bitcoin briefly neared $100,000 per coin last week, spurred by the announcement of SEC Chair Gary Gensler’s upcoming resignation. Investors interpret the move as a positive for the crypto space, reflecting renewed “risk-on” sentiment in the market. Analysts predict Bitcoin could continue its upward trajectory as liquidity and economic growth expectations shift in 2025.

Colas highlights strong economic fundamentals heading into 2025, including a robust labor market, lower interest rates, and anticipated tax cuts under the new administration. These factors could support above-average market performance, with the S&P 500 potentially gaining 15% to close next year near 6,840.

​As we move into the holiday season, this week’s inflation data, corporate earnings, and broader market trends will provide critical insights for the months ahead.