CEEMEA CLOSE: PCE data paves the way for a Sept Fed rate cut

26 JULY 14:41GMT: The DXY slipped to a session low even after PCE Price Index met the f/c and cooled to 2.50% y/y from 2.60% y/y prior, while m/m figures also met the f/c and rose by 0.1% from 0% prior. Core PCE Price Index missed the f/c (2.50% y/y), but remained steady at 2.60% y/y. Elsewhere, Real Personal Spending came in at 0.2% from prior and f/c of 0.3%, while Personal income fell to 0.2% from 0.5% (f/c 0.4%) - the data bolsters the case for the Fed to cut interest rates in Sept (more here). The data also suggest that consumers may be getting stretched thin despite spending continuing to grow, but with the labour market cooling, consumption growth may ease further in the second half of the yr (via Bbg). The US10yr yield cooled to a 1-wk low of 4.19% and USD/CEEMEAs are softer at the European close on Friday. USD/RUB climbed to a 3-day high of 87.3132 after The CBR hiked interest rates by 200bps to 18% at its July meeting after inflation accelerated for six straight months and signaled that they would considering increasing rates further. The move is the first of its kind this year and marks a pivot from the bank's previous plans to begin its monetary easing cycle later this year (insight here). USD/TRY has been cooling from its 9-day high of 33.1526 after Turkey's CBRT DepGov Akcay told Reuters that "a rate cutting cycle is not event contemplated at this point." Akcay highlighted that a rate cut is not on the agenda "before a secular decline in the underlying trend of monthly inflation is observed and is accompanied by other indicators we closely follow" (more here). EUR/HUF found support at the 392 handle even after Hungary's Economy Minister Nagy expressed that Hungary s 2Q GDP figures to be released next week probably won t show an improvement from the first three months of the year owing to struggling industrial exports to western Europe (more here).

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