US Counterattack Inflation – December PCE Accelerates and Threatens the Fed

[Igor Pereira]

Traders, the narrative that inflation is dead and buried is about to collide with the reality of hard data.

The Wall Street consensus has just released its projections for the December Price Index for Personal Consumption Expenses (PCE) – the Federal Reserve’s favorite inflation indicator. The figures show a dangerous spike that can force interest to get even higher.

By Igor Pereira Financial Market Analyst

The dissection of institutional expectations and what that means for our operations.

The forecast table of the The Wall Street Journal reveals that large capital is already precluding a reacceleration of inflation.

• Meteorologists expect PCE inflation (core and full) to be 0.37% in December (an annual rate of 4.5%).

• The median forecast (Median forecast) confirms exactly this projection, indicating 0.37% monthly high (m/m) for both the full index (Headline) and the core (Core).

• Banks like Barclays and Morgan Stanley project the monthly discharge (m/m) of the full PCE at 0.40%, while Nomura is the most aggressive, estimating 0.41%.

• This is a significant leap when compared to the previous month (November), where the full index (Headline) registered only 0.21% and the core (Core) was mild 0.16%.

It is in the annual metric that the damage becomes visible in the long term.

• This would push the core index of the PCE to 3.0% over 12 months, the highest value since February 2025.

• In the median projection, the core (Core y/y) hits the 3.0%.

• The full PCE is estimated to be 2.9%, the highest level since March 2024.

• The median prediction of the table also corroborates the full PCE (Headline y/y) at 2.9%.

If those numbers confirm, the Fed will be trapped. They cannot justify interest cuts with base inflation resuming 3.0% and renewing maximums of several months.

My Vision: A warmer PCE than expected (or even in line with these aggressive projections of 0.37% m/m) solidifies the narrative of "High Interests for Longer".

1. The Initial Impact: The stock market may be liquidated immediately, and the yields of the securities (Yields) shall be triggered.

2. Metals (Gold and Silver): The reflex reaction may be of sales pressure due to the temporary strengthening of the Dollar. However, remember our macro thesis: persistent inflation destroys the purchasing power of the fiduciary currency. These inflation-induced falls continue to be institutional windows for accumulation and continued high.

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