US Q2 PCE Prices Final Rise 5.0% and Merck Drug Progress
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The final reading of US PCE Prices for the second quarter on a quarter-on-quarter basis came in at 5.0%, trailing the expected 5.3% but accelerating from the previous 4.6%. In corporate developments, Merck's (MRK) tulisokibart successfully met its primary and key secondary endpoints in a Phase 2b trial involving patients with moderate to severe hidradenitis suppurativa. Additionally, the US ADP Employment Change for September printed at 90K, surpassing the forecasted 70K and following a prior figure of 38K. Analysts noted that while the inflation impulse shows acceleration compared to the prior period, the absolute level turned out softer than market participants initially feared. Observers will closely monitor whether this momentum spills over into the monthly PCE series targeted by the Federal Reserve.
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The final U.S. Q2 Personal Consumption Expenditures (PCE) price index came in at 5.0%, below the expected 5.3%. This release shows that while inflationary pressures persist, they are milder than market concerns and are expected to have a limited impact on the rate path. Investors should monitor the divergence from monthly PCE indicators and changes in the Fed's rate outlook.
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- Bonds — As the PCE inflation rate was finalized at 5.0%, below the expectation (5.3%), inflation concerns have eased, acting positively on bond prices.
- Growth Stocks — The softer-than-expected inflation indicator reduces the pressure for additional Fed rate hikes, acting as a tailwind for growth stocks with high valuation burdens.
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- Banks — Relief in inflation pressures and the possibility of future rate cuts lead to a narrowing of net interest margins, negatively impacting the profitability of the banking sector.
DYAX 전담 분석
With the Q2 PCE inflation rate coming in below expectations, fears of a surge in inflation have subsided somewhat. However, the accelerated trend compared to the previous quarter continues, which does not completely eliminate caution regarding the Fed's monetary policy path.
If price pressures continue to slow down going forward, it could act as a tailwind for growth stocks and the bond market, but if rate cut expectations are delayed in conjunction with strong employment indicators, volatility may expand. Monthly PCE and remarks from Fed officials should be monitored as key indicators.
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