PREVIEW - US PCE INFLATION (13:30BST/08:30EDT)

PCE carries a standing advantage over CPI in that much of its monthly shape is inferable in advance from the CPI and PPI components already in hand, which is why the desk-level miss or beat on the core month-on-month print tends to be modest and the surprise, when it comes, is usually concentrated in the residual categories where sourcing differs. The harder question on this print is the wedge between the firmer sequential run implied by the upstream data and the disinflationary pull of the methodology revision, since a retroactive restatement of the deflator history reshapes the base against which the new month compounds and can shift the year-on-year rate independently of what the current month does. Episodes where revisions and fresh data arrive together have historically generated two-way confusion in the front end, with the initial reaction often reversing once the net effect on the level of the series is absorbed. The context that matters for the reaction function is the breadth of official commentary describing pressures as broad-based with upside skew: in that setting an upside core surprise has tended to move the front end and terminal pricing more than a symmetric downside one, because the asymmetry of the prevailing reaction function favours hawkish repricing. What follows the release is the mapping into the committee's own projection round and whether officials' prior estimates of the series prove close to the revised print, which is the tell for how much of the revision was already internalised.