PCE Day: The Number That Decides Everything
December PCE data drops today. Here's the 3-step framework to read it — and what it means for SPX, bonds, and your trades.
Catalyst
PCE Price Index (Dec)
Economic Events
- 08:30 ET — PCE Price Index (Dec)
- 08:30 ET — Personal Income (Dec)
- 08:30 ET — Personal Spending (Dec)
TL;DR
- PCE inflation data (Dec) releases today 08:30 ET — Fed's preferred measure
- Watch Core PCE MoM, not headline YoY
- 10Y yield rising to 4.09% after hawkish FOMC minutes
- KOSPI hits record 5,677 but breadth is narrowing dangerously
- Walmart beat revenue but guided lower — consumer softening signal
- Deere beat by 19.8% and raised guidance — manufacturing divergence
Market Overview
| Asset | Last | Change | Signal |
|---|---|---|---|
| SPX | ~6,000 | -0.5% | Data dependent — PCE reaction |
| NDX | — | — | Tech continues to lag |
| US10Y | 4.09% | +5bps | FOMC hawkish repricing |
| VIX | 20.29 | -4.3% | Down from 22.7 but still elevated |
| BTC | ~$60K | -17% YTD | -17% YTD, risk-off environment |
| Gold | <$5,000 | Off highs | Off $5,700 highs |
| KOSPI | 5,677 | +3.09% | Record high but narrow breadth |
| DXY | Elevated | — | Hawkish FOMC supports dollar |
Today's Catalyst: PCE Price Index
The Personal Consumption Expenditures price index is the Federal Reserve's preferred inflation gauge. Today's release covers December 2025 data.
The 3-Step PCE Framework
Step 1: Core PCE MoM Year-over-year is backward-looking noise. Month-over-month tells you the current inflation trend. Last reading was +0.1% MoM. Below that signals disinflation. Above 0.3% signals trouble.
Step 2: Services ex-Housing PCE This is what Chair Powell focuses on. If this component is falling, the Fed pivot narrative is intact. If sticky, rate cuts get pushed further out.
Step 3: Personal Spending vs Income Gap When spending exceeds income, consumers are borrowing to maintain lifestyle. Last reading showed spending at +0.5% vs income at +0.3%. The gap is widening.
Earnings Divergence: Walmart vs Deere
A fascinating split emerged in yesterday's earnings:
Walmart beat on revenue ($190.66B) and comp sales (+4.6%), but guided FY EPS at $2.75-2.85 vs $2.96 expected. The consumer is spending today but the outlook is weakening.
Deere beat EPS by 19.8% ($2.42 vs $2.02), revenue by 26.6%, and raised full-year guidance to $4.5-5B. Manufacturing is accelerating.
This divergence — consumer softening while manufacturing strengthens — suggests a rotation is underway.
KOSPI: Record High, Narrow Breadth
KOSPI hit 5,677 yesterday, up 3.09%. But the internals tell a different story:
- Samsung Electronics: +0.90% (index driver)
- SK Hynix: -0.79%
- Hyundai Motor: -1.28%
- LG Energy Solution: -3.54%
Key Levels
| Asset | Support | Resistance | Bias |
|---|---|---|---|
| SPX | 5,920 | 6,050 | Neutral (data dependent) |
| 10Y | 4.00% | 4.15% | Rising |
| BTC | $58,000 | $63,000 | Bearish until $63K reclaim |
| KOSPI | 5,500 | 5,700 | Bullish but narrow |
Scenarios
If: Core PCE MoM ≤0.1%
Then: Bond rally → Equity relief → SPX tests 6,050
If: Core PCE MoM ≥0.3%
Then: 10Y spikes above 4.15% → Equity pain deepens
TTL Take
PCE is today's market-mover. The bond market has already started repricing after hawkish FOMC minutes pushed 10Y from 4.04% to 4.09%.
The Walmart-Deere earnings divergence adds another layer. The rotation from consumer to manufacturing names may accelerate regardless of today's PCE print.
Lose less. Last longer.
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