All articles tagged with #pce
Cleveland Fed president Beth Hammack says inflation will require more than one 25bp rate hike; current rates aren’t meaningfully restraining growth, so acting now is prudent to hit the 2% target. She notes core PCE around 3.3% in June and CPI near 2.5–2.6%, and emphasizes that markets should complement, not substitute, Fed action.
The Fed held rates at 3.50%–3.75% but dissent grows, with three policymakers urging a hike. Long-dated yields jumped and the yield curve steepened, signaling higher-term inflation risks and lingering policy doubt beyond the next meeting. While PCE measures show some near‑term easing, annual inflation remains well above target, energy costs persist, and investors are pricing a more persistent inflation path and potential policy inertia.
U.S. GDP expanded 1.5% in Q2, below forecasts and dragged by weaker inventories and federal spending, even as consumer spending stayed solid. Inflation remains elevated with core PCE at 3.3% (headline PCE around 3.7% year-over-year) and the Fed holding rates at 3.5%–3.75%. June spending rose 0.3% and the savings rate fell to 2.7%, the lowest in four years. Exports rose and imports fell, while energy prices eased and inventories/government spending subtracted from growth, underscoring ongoing inflation pressures despite steady demand.
The Commerce Department’s Personal Consumption Expenditures price index—the Fed’s preferred inflation gauge—fell 0.1% in June, pulling the annual rate down to 3.7% from 4.1%. The drop was driven largely by energy prices, with gasoline prices sliding as Middle East tensions cooled, boosting energy-driven consumption. Core PCE rose 0.1% month over month to 3.3% year over year, suggesting underlying inflation remains around 3%. While spending grew and the June slowdown provided some relief to households, analysts warn the decline may reverse in July due to energy volatility, keeping the inflation outlook and Fed policy path uncertain.
Trump-era policy moves—global tariffs and the Iran situation—have pushed U.S. inflation to a three-year high, with core PCE rising even as oil retreats; the data suggest inflation pressures could keep the Fed on track for rate hikes, potentially cooling yet still challenging stock valuations.
US May 2026 personal income grew 0.7% (+$181.6B), with disposable income and PCE also up 0.7%; personal saving reached $704.2B (3.0%). The gain was led by farm proprietors’ income and compensation (aided by relief payments), while real PCE rose 0.3% as the PCE price index climbed 0.4% for the month. BEA notes upcoming 2026 annual updates to national, industry, state, and county accounts beginning Sept. 30, 2026.
The Fed’s preferred inflation gauge, the PCE index, rose 4.1% in May (year over year) and 0.4% month over month, with core PCE up 3.4% year over year and 0.3% month over month, signaling persistent price pressures and keeping the door open for a rate increase within the next 12 months, according to economists who differ on the path ahead.
Cheaper crude may cool headline inflation and ease consumer pressure, but it could also spur extra demand in an economy that’s already running hot, potentially nudging the Fed toward higher rates. Apollo economist Torsten Sløk notes a shift in market logic: oil prices falling below $70 hasn’t dragged the 2-year yield down in lockstep, suggesting cheaper oil could lift spending and inflation instead of just cooling it. With core PCE expected to rise to about 3.4% in May, and risks from events like the Strait of Hormuz reopening, investors face a mixed picture where oil’s drag on inflation could be offset by renewed demand, complicating Fed policy.
Stocks finished mixed as the Dow rose about 1.1% and the S&P 500 gained 0.1%, while the Nasdaq slipped around 0.3%. Micron's blowout results boosted memory-chip optimism and lifted the market, and Qualcomm gained on AI data-center opportunities, but hotter inflation from the PCE index in May (4.1% year-over-year, 0.4% month-over-month) kept rate-hike bets alive. Oil prices eased overall with Brent near 74 and WTI around 70 amid supply dynamics and geopolitical tensions.
Stock futures climbed after Micron Technology beat earnings and boosted AI enthusiasm, with Nasdaq futures up about 2.4%, S&P 500 futures up about 0.8%, and Dow futures up around 0.3% as investors eye the Fed’s inflation data; Micron’s strong outlook spurred relief over AI valuations, while Qualcomm expanded into data-center products. Brent and WTI oil slid to multi-week lows on easing supply concerns. The latest Personal Consumption Expenditures price index showed prices up 4.1% year over year in May and 0.4% month over month, keeping a rate-hike debate alive.
Tech stocks jump in premarket trading as Micron’s strong earnings calm AI jitters. Nasdaq-100 futures rise about 2.2%, S&P 500 futures up ~0.8%, and Dow futures inch higher (~0.1%) as Qualcomm’s AI-expansion plans add to sentiment. Investors await the Federal Reserve’s preferred inflation gauge, the PCE price index, which could shape expectations for rate moves.
U.S. Treasury yields slipped on Tuesday despite fears of higher rates weighing on tech stocks, with the 10-year yield around 4.495%, the 2-year about 4.198%, and the 30-year near 4.943%. Investors await May’s PCE inflation data—the Fed’s preferred gauge—with core PCE expected to rise from April per economists polled by FactSet.
April’s PCE inflation rose 3.8% year over year—the highest in nearly three years, with core PCE at 3.3%—as energy costs led broad price gains across housing, utilities and services; personal income growth lagged inflation and the saving rate slipped to 2.6%, while spending rose 0.5% in April, signaling households are feeling the squeeze and fueling expectations for a potential Fed rate hike later this year under new chair Warsh.
BEA's April 2026 personal income fell marginally (less than $0.1B) while disposable personal income slipped 0.1%; meanwhile personal consumption expenditures rose 0.5%, lifting total outlays by about $114B. Personal saving was $611.7B (2.6% saving rate). Real DPI dropped 0.5% and real PCE increased 0.1%, with the PCE price index up 0.4% (0.2% excluding food and energy). The income decline was mainly due to farm proprietors’ income tied to the Farmer Bridge Assistance Program, with compensation led by private wages and salaries. Next BEA release is June 25, 2026.
April’s core PCE rose 0.2% to 3.3% year over year, with the broader PCE up 0.4% to 3.8%, while Q1 GDP was revised to 1.6% annualized and consumer spending rose 0.5% in April. The data suggest inflation remains elevated but cooling, keeping the Fed on hold for now, with markets pricing potential rate moves in early next year.