With inflation data surprising to the upside recently...
Source: Bloomberg
...the doves' last chance for sooner than later rate-cuts is today's Core PCE Deflator - often described as The Fed's favorite inflation signal. Last month saw an uptick in the headline deflator and following yesterday's core PCE rise for Q1, all eyes are on the March data released this morning.
However, both the headline and core PCE Deflator data printed hotter than expected (+2.7% vs +2.6% exp vs +2.5% prior and +2.8% vs +2.7% exp vs +2.8% prior respectively)...
Source: Bloomberg
The silver lining is that this hot PCE priont is 'dovish' relative to the GDP-based data we saw yesterday, with whisper numbers of +0.4 to +0.5% MoM (vs the +0.3% print).
The so-called SuperCore - Services inflation ex-Shelter -rose once again, and was revised higher...
Source: Bloomberg
Income and Spending both rose again on a MoM basis with spending outpacing income (again). The 0.8% MoM rise in spending was the highest since Jan 2023...
Source: Bloomberg
Which meant the personal savings rate plunged to 3.2% from 3.6% - its lowest since Nov 2022...
Source: Bloomberg
Finally, while the markets are exuberant at the survey-based disinflation, we do note that it's not all sunshine and unicorns. The vast majority of the reduction in inflation has been 'cyclical'...
Source: Bloomberg
Acyclical Core PCE inflation remains extremely high, although it has fallen from its highs.
Is The (apolitical) Fed going to be able to cut at all this year like Joe Biden said they would?
