Federal Reserve Chair Janet Yellen's favorite inflation indicator, as well as fresh data on income and spending, could temporarily distract markets from the Brexit on Wednesday.
The PCE inflation data could be important because futures markets are now reflecting a chance that the Federal Reserve could actually cut interest rates before the end of the year, instead of raise them.
If there were a real move higher in inflation, it would be one thing that could prod the Fed to consider hiking rates and certainly change market expectatins. As for now, the Fed is believed to be on hold until the end of the year at the earliest.
The inflation measure is expected to show just a slight increase, but remain subdued and below the Fed's 2 percent target. The 8:30 a.m. EDT report is expected to show that core PCE prices rose 0.2 percent in May, or 1.7 percent year over year. Some other data is beginning to show signs that wages and other inflation measures are rising.
The futures-market odds shifted from a chance of a rate hike to a better chance of a rate cut by December, as traders reacted to the recent volatility around the U.K.'s surprise vote to leave the European Union.
Consumer spending, expected to rise 0.4 percent, is also an important number due on Wednesday, coming the day after revisions to first-quarter GDP showed that consumer spending growth slowed – a red flag for the economy. Consumption grew by 1.5 percent for the first quarter, lower than the prior estimate of 1.9 percent.
"This is really important for the domestic outlook. Obviously, markets are more focused on what's happening overseas but at home in the U.S., separate from the risk from abroad, we've been tracking the data closer than ever trying to figure out what's going on," said Jesse Hurwitz, U.S. economist at Barclays.
Hurwitz expects the consumer spending number to be stronger than consensus – up 0.5 percent. He said retail sales data and other data showed that spending was improving, and the second quarter could be stronger.
"We're tracking 3.8 percent consumption growth for Q2 for now," he said.
But the first-quarter revision was worrisome since it showed a further deceleration in the trend, and it would be important to show a bounce-back in spending. "The softness in consumption in the first quarter is a little more pronounced, so therefore a little bit more concerning at this point," he said.
Hurwitz expects personal income to rise by 0.3 percent. Pending home sales are released at 10 a.m. and economists expect to see a 2 percent decline.