It’ll be a fairly busy week on the US macro front. An update on the Fed’s preferred price gauge is the marquee release.

We already know US inflation was tame in May. Or at least according to government statistics, which is to say according to the last CPI and PPI releases.

Expectations for the PCE prints are accordingly benign. Economists expect an unchanged headline and a 0.1% MoM advance for the core gauge.

Consensus readings would mark a return to the pace observed late last year, when Fed officials were heartened enough by the disinflation trajectory (or worried enough by Joe Biden’s abysmal approval ratings, however you want to look at it) to telegraph rate cuts commencing as soon as H1 of 2024.

Alas, a succession of CPI overshoots in Q1 and an unbowed labor market undermined the Fed’s confidence in the outlook for price growth, and the rest is history — history, just like two of the three 2024 rate cuts tipped by the December and March dot plots. As of this month, the “median” official expects just a single reduction, and likely not until Q4 if recent Fedspeak’s any indication.

Speaking of Fed forecasts, the figure below, from BMO’s US rates team, makes an important point: Even the most dovish officials currently see no additional progress towards 2% on the core gauge into year-end.

Indeed, if the YoY pace decelerates to 2.6% in the release for May due this Friday, every Fed official would be on the record projecting faster core price growth. I should note that during the post-FOMC press conference this month, Jerome Powell indicated that no official changed their SEP forecasts after seeing the May CPI report, released just hours earlier. So, the forecasts are stale. Or “conservative.”

“While the Fed has routinely downplayed the predictive power of the SEP — which doesn’t have a particularly stellar track record in terms of forecasting — [it] can be a useful benchmark for investors’ monetary policy expectations,” BMO’s Ian Lyngen and Vail Hartman wrote, drawing attention to the fact that despite officials’ on-the-record forecasts for faster core price growth over the balance of 2024, nobody’s projecting a rate hike. “This illustration effectively endorses the use of the three- and six-month annualized rates of core PCE by implying the FOMC does not need to be at 2% inflation to lower policy rates,” they went on.

That’s an important point and it underlines an incongruity in Powell’s messaging: He has, at times, pushed back on the notion that the three- and six-month rates are relevant for policymakers, and yet he’s said repeatedly that the Fed doesn’t need to be at 2% on a 12-month basis to cut rates. Powell would square that circle by saying the Fed’s seeking “confidence” that 12-month price growth is poised to return to 2% and that measures like the three- and six-month annualized rates can make the Fed more or less confident, but aren’t sufficient on their own.

Anyway, September’s a coin toss for a Fed cut and the market’s priced for nearly two full quarter-point cuts by year-end. In other words: The dots are too hawkish. According to traders, anyway.

As the figure above suggests, equities stopped caring about this a long time ago.

Fed critics will recoil: “Bullsh-t! The Fed could, and should, talk down risk assets in order to curb the wealth effect, tame inflation and preemptively deflate an obvious bubble!” they’ll shout, on social media or on Substack or in less caustic terms, in notes to clients. “This is within the Fed’s capacity to control. They’re just not committed enough!”

There are a lot of possible rejoinders, but I’ll eschew the temptation to remind you that anyone who follows the Fed closely enough to deride current policy settings in those terms is surely a wealth effect beneficiary (oops, I just reminded you!) in favor of simply noting that the forward curve was priced for more than half a dozen 2024 cuts in January. That pricing now reflects just 48bps of easing. So, four fewer rate cuts (and then some). But the S&P’s registered 31 records in 2024. Say it with me, one word at a time: Stocks. Don’t. Care.

As month-end (and thereby a new month) comes into view, it’s worth recalling that July’s been very kind to US equities looking back a decade.

Also on the docket in the US this week: New and pending home sales, updates on the two national home price gauges, Conference Board confidence, the final read on Q1 GDP and the final read on University of Michigan sentiment for this month. Jobless claims will be eyed very closely for obvious reasons.

Oh, and the first US presidential debate’s on Thursday. It’ll be a train wreck. It’s a mistake to hold a debate. A grievous mistake. Nothing good can come of it.