Disinflation Pressures Eased Last Month

The Bureau of Economic Analysis released its Personal Consumption Expenditures report for June this morning and it showed that price levels recovered a little lost ground last month. The all-inclusive PCE Deflator rose by the expected 0.4% last month after only gaining 0.1% in May. That helped push June’s year-over-year pace to 0.8% from May’s 0.5%. At the core level without food and energy, June’s PCE rose by 0.2% and that matched May’s increase. June’s year-over-year pace fell to 0.9% from May’s 1.0%.

Also out this morning, Personal Income fell by a greater-than-expected 1.1% in June against a forecast of just a 0.6% decrease. May’s 4.2% decline was revised to 4.4%. The other side of the coin, Personal Spending, rose by 5.6% and that beat the estimate of a 5.2% gain. May’s 8.2% growth was revised to 8.5%. Adjusted for inflation, Real Personal Spending notched a 5.2% gain on the heels of May’s upwardly revised 8.4% pick-up. As an aside, supplemental unemployment benefits expire today and no Congressional agreement on how to extend them has been reached.

Treasuries, meanwhile, continue their gradual rally and the Ten-Year’s yield is down to around 0.53%. A Two-Year will get you ten basis points. Crude oil has slipped a little bit to around $40.25 while gold has rebounded about $18 to $1,975. Domestic equity markets look to open with a slightly positive tilt.