Stocks continue to rise since the US economic growth exceptionalism story does not appear to be going away anytime soon and as inflation still looks like it will be transitory. It might be hard for stocks to hold onto gains heading into the long weekend and ahead of President Biden’s unveiling of his $6 trillion spending plan.
Today’s data showed that the spending spree continues in America and inflation continues to come in hotter-than-expected. A wrath of data suggests the economy will run hot this summer on reopening momentum and despite the waning impact from stimulus checks and as some households await the child tax credits in July.
US Data
The April Core PCE Price index came in hotter-than-expected at 3.1% from an upwardly revised 1.9% prior reading, and well above the Fed objective of 2.0%. The transitory thesis remains intact and that is why Treasury yields refuse to takeoff. The 10-year yield pared earlier gains and is only 1.2 basis points higher at 1.587%. The dollar can’t muster up a significant rally unless Treasury yields rally back to the highs set in March.
Personal spending rose 0.5%, as expected and will likely rip higher as Americans continue to embrace pre-pandemic life and supporting service industries.
Advanced Goods Trade Balanced eased a little which provides some upside for future growth prospects.
The final May Michigan consumer sentiment report mostly matched the preliminary readings. Inflation expectations for 1-year stayed steady at 4.6%, while the 5-10 year outlook.
After a wide array of data, the inflation debate remains unchanged and transitory arguments are still in the lead.
Content is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Business Information & Services, Inc. or any of its affiliates, subsidiaries, officers or directors. If you would like to reproduce or redistribute any of the content found on MarketPulse, an award winning forex, commodities and global indices analysis and news site service produced by OANDA Business Information & Services, Inc., please access the RSS feed or contact us at info@marketpulse.com. Visit https://www.marketpulse.com/ to find out more about the beat of the global markets. © 2023 OANDA Business Information & Services Inc.
Ed Moya
His particular expertise lies across a wide range of asset classes including FX, commodities, fixed income, stocks and cryptocurrencies.
Over the course of his career, Ed has worked with some of the leading forex brokerages, research teams and news departments on Wall Street including Global Forex Trading, FX Solutions and Trading Advantage. Prior to OANDA he worked with TradeTheNews.com, where he provided market analysis on economic data and corporate news.
Based in New York, Ed is a regular guest on several major financial television networks including CNBC, Bloomberg TV, Yahoo! Finance Live, Fox Business, cheddar news, and CoinDesk TV. His views are trusted by the world’s most respected global newswires including Reuters, Bloomberg and the Associated Press, and he is regularly quoted in leading publications such as MSN, MarketWatch, Forbes, Seeking Alpha, The New York Times and The Wall Street Journal.
Ed holds a BA in Economics from Rutgers University.
Latest posts by Ed Moya (see all)
- Market Insights Podcast – Powell struggles to deliver a hawkish hold - 1 November 2023
- Fed React: USD/JPY softer after Fed fails to deliver hawkish hold - 1 November 2023
- EUR/USD: Dollar wavers on slower pace of Treasury Refunding Sales and mixed labor data - 1 November 2023