Personal Consumptions Expenditures met expectations

___

Published Date 6/28/2024

Inflation in May right on forecasts. The PCE index was unchanged (0.0%) in May from April 2024, marking the smallest change in six months, and following a 0.3% rise in April, in line with forecasts. Prices for goods decreased 0.4% and prices for services increased 0.2%. Meanwhile, the core PCE index, which excludes food and energy, rose 0.1%, the least since November, compared to 0.3% in April and also matching forecasts, food prices increased 0.1% and energy prices decreased 2.1%. The annual PCE rate decreased to 2.6% from 2.7% in April, the lowest since March 2021. PCE in May reflected an increase of $34.2B in spending for services and a $13.6B increase in spending for goods. In the services sector, the largest contributors to the increase were health care (led by hospitals), housing, and transportation services (led by air transportation). In the goods sector the increase reflected an increase in other nondurable goods (led by prescription drugs) that was partly offset by a decrease in gasoline and other energy goods. When considering real consumption expenditure, spending went up by 0.5% from the previous month.

May personal income, expected at +0.4% from +0.3% in April, increased 0.5%, personal spending expected +0.3% increased 0.5% and up from +0.2% in April.

At 9 am ET the reaction, the 10 year note 4.28% -1 bp, MBS prices +11 bps. Swap markets continued to project about 45 basis points of policy easing in 2024, which would equate to almost two rate cuts. SF Fed President Daily commented the PCE data is additional news that Fed policy is working. Richmond Fed Barkin said the inflation battle still hasn’t been won, and the US economy is likely to remain resilient as long as unemployment remains low and asset valuations high.

At 9:30 am the DJIA opened -50, but quickly increased 153 points, NASDAQ +21, S&P +5. 10 year at 9:30 am 4.26% -3 bp. FNMA 6.0 30 year coupon at 9:30 am +12 bps and +14 bps from 9:30 am yesterday; 6.5 coupon +10 bp and +7 bp from 9:30 am yesterday.

At 9:45 am June Chicago purchasing managers index expected at 40.0 from 35.4 in April increased to 47.4, still in contraction mode under 50. No reaction to the improvement.

At 10 am University of Michigan consumer sentiment index, expected at 65.7 increased to 68.2. Year/year inflation expectations thought to be +3.3% reported at 3.0%.

Source: TBWS

All information furnished has been forwarded to you and is provided by thetbwsgroup only for informational purposes. Forecasting shall be considered as events which may be expected but not guaranteed. Neither the forwarding party and/or company nor thetbwsgroup assume any responsibility to any person who relies on information or forecasting contained in this report and disclaims all liability in respect to decisions or actions, or lack thereof based on any or all of the contents of this report.

Millenium Home Mortgage, LLC NMLS # 51519 Licensed by the NJ Department of Banking and Insurance, CT Mortgage Banker 1st and 2nd Mortgages Licensed as MHM Home Mortgage, Licensed by the Pennsylvania Department of Banking. All interest rates, fees and programs are subject to change without notice. THIS ENTIRE SITE IS NOT INTENDED AS A SOLICITATION FOR MORTGAGE LOAN CUSTOMERS IN NEW YORK, PENNSYLVANIA, OR CONNECTICUT.