PCE prices rise in line with forecasts
An in-line PCE report left bonds unmoved but reinforced rising inflation pressures, keeping yields elevated.

US PCE inflation rose as expected in December.
Trump set to impose tariffs on Feb. 1.
Tokyo inflation hit a near two-year high.
The Federal Reserve’s preferred inflation gauge rose in December, with the personal consumption expenditures (PCE) price index climbing 0.3%—the biggest increase in eight months. The core PCE measure, which strips out volatile food and energy costs, advanced 0.2%, both aligning with market expectations.
On an annual basis, headline PCE inflation ticked up to 2.6% from 2.4%, while the core measure remained steady at 2.8%. Both figures remain well above the Fed’s 2% target, underscoring the persistent inflationary pressures that policymakers have been grappling with.
Consumer spending showed resilience through the year-end, accelerating in December as demand for durable goods surged. The uptick suggests that consumers may be front-loading purchases ahead of potential price hikes tied to President Donald Trump’s proposed tariffs.
An inline PCE report drew almost no reaction from the bond market. However, the report was the last of three inflation reports for December showing rising inflation pressures that will continue to keep long-dated bond yields elevated.
Trump’s tariff plan takes shape as deadline looms
Trump is set to roll out his first wave of tariffs on February 1, with Canada and Mexico expected to be key targets. While details on the scope remain unclear, the president reiterated his commitment to the plan on Thursday.
Meanwhile, Nvidia CEO Jensen Huang is slated to meet with Trump today, according to a person familiar with the matter. In a separate development, US officials are reportedly investigating whether China’s DeepSeek sidestepped export restrictions to acquire advanced Nvidia chips.
Tokyo inflation picks up
Inflationary pressures in Japan accelerated in January, with Tokyo’s core consumer price index (CPI) rising to 2.5% year-over-year from 2.4%—its fastest pace in nearly a year. A key measure that excludes fresh food and energy also edged higher to 1.9% from 1.8%, while headline CPI surged to 3.4% from 3.0%, marking its highest level in almost two years.
The data bolsters expectations that inflation could push toward 3% in the coming months, as a persistently weak yen continues to drive up import costs. With price pressures remaining sticky and real wage growth showing signs of improvement, the Bank of Japan may still have room for one or two more rate hikes this year.