These Are Signs of a Gentle Cooling
Rate-cut uncertainty will linger.
We’ll see the inflation data the Federal Reserve favors over all others this morning at 8:30 a.m. ET. It’s a big moment for teetering financial markets.The FactSet consensus forecast for the headline Personal Consumption Expenditures Price Index is a 2.7 percent year-over-year increase, consistent with March, and a 0.30 percent month-over-month increase, down from 0.32 percent.
The critical core PCE – which removes food and energy prices from the equation because of their volatility – is expected to print at a 2.8 percent annual rate, in line with March, and a 0.30 percent monthly rate, down from 0.32 percent.
Is inflation sticky? Is it slowing? Today’s price action will give us a snap read, though we do have some indication of slowing from other sources.
Data released by the US Bureau of Economic Analysis on Thursday show first-quarter growth was 1.3 percent, down from an initial estimate of 1.6 percent.
The PCE Price Index rose at a 3.3 percent annualized rate during the first quarter, down slightly from the BEA’s initial forecast. Core PCE rose 3.6 percent versus a 3.7 percent initial estimate.
Perhaps the most positive point is that disposable personal income growth was 1.9 percent versus an initial estimate of 1.1 percent. That’s fuel for future consumer spending, which accounts for as much as 70 percent of GDP.
What the world – well, investors, traders, and speculators, at least – wants now is that April PCE data.