In addition to the inflation data, personal income surged 0.8%, beating the 0.3% estimate and continuing a strong two-month trend after a prior upward revision to 0.7%. However, personal consumption rose just 0.1%, down from 0.7% in March, though inflation-adjusted consumption held steady at 0.2%. Strong income bodes well for the consumer.
First, low monthly PCE readings from mid-2024 will soon roll off the 12-month calculation window, mathematically raising YoY comparisons. Second, tariffs may introduce new inflationary pressures moving forward.
With a string of soft monthly data starting in May 2024, upcoming MoM prints of 0.2% or more in headline or core PCE would likely lift annual inflation readings further. So it is likely PCE data has reached a low for now. The Fed and the market will have to deal with that dynamic going forward.
Change in Imports and Exports:
Imports: Goods imports decreased dramatically by $68.4 billion to $276.1 billion in April from $344.5 billion in March.
Reasons for the Dramatic Change: The significant improvement in the trade balance was primarily driven by a sharp decline in imports, coupled with a modest increase in exports. While specific reasons for the import drop are not fully detailed in the provided data, it seems tariff induced inventory accumulation may have reached its peak for now at least.
Later in the morning the Univ. of Michigan consumer sentiment in May held steady at 52.2, matching April’s level and coming in above both the preliminary reading of 50.8 and the 51.0 estimate. This marks a stabilization after four consecutive months of sharp declines. The current conditions index came in at 58.6, slightly below last month’s 59.6, while expectations improved to 47.9 from a preliminary 46.5 and prior 47.3—still the second-lowest reading of the year.
According to survey director Joanne Hsu, sentiment was buoyed late in the month by the temporary pause in some China tariffs, which improved expectations for business conditions. However, these gains were offset by weaker assessments of personal finances, tied to stagnant incomes. Consumers generally remain concerned about the future, and while trade policy clearly influenced sentiment, the tax and spending bill in Congress has yet to register with the public.
On foreign policy, he stated that a Gaza deal is close, and there is a real possibility of a breakthrough with Iran in the near future. Iran has expressed other views, but who really knows. Turning to domestic issues, he expressed his desire to see a larger tax cut in the House bill and suggested that Harvard's funding should be redirected to support trade schools.
The calmer comments on Xi and China during his press conference came after a morning sharply worded post, where President Trump claimed that China was facing grave economic turmoil just two weeks ago, brought on by the high tariffs he imposed, which he said made it "virtually impossible" for China to trade into the U.S.—the world’s largest marketplace. According to Trump, this abrupt economic pressure led to widespread factory closures and even civil unrest in China. Wanting to avoid further destabilization, he said he made a quick deal with Chinese leadership to help prevent a worsening crisis. While this deal initially brought stability, Trump now accuses China of having “totally violated” the agreement, expressing frustration with what he sees as a betrayal despite his efforts to be “Mr. Nice Guy.” His tone suggests a hardening stance on trade enforcement going forward.
The deals - especially with China and the EU will continue - but once, no new trade deals were completed.
Dow Industrial Average, +54.34 points or 0.13% at 42,270.07S&P down -0.48 points or -0.01% at 5911.69Nasdaq down -62.11 points or -0.22% at 19113.77
The Russell 2000 closed lower by -8.49 points or -0.41% at 2066.26
Dow rose 1.60%S&P rose 1.88%Nasdaq rose 2.01%Russell 2000 rose 2.01%
US yields closed lower:
2-year yield 3.899%, -3.7 basis points5-year yield 3.959%, -3.8 basis points10-year yield 4.398%, -2.6 basis points30-year yield 4.924%, +0.1 basis point. This article was written by Greg Michalowski at www.forexlive.com. Read More Details
Finally We wish PressBee provided you with enough information of ( Forexlive Americas FX news wrap 30 May: PCE dips but may be the low for the cycle. )
Also on site :