Inflation Report Brings Few Surprises

The Bureau of Economic Analysis released its April report for its Personal Consumption Expenditures Index this morning and the results were pretty close to expectations. For the month of April, headline PCE rose 0.6% as expected with the year-over-year pace rising to 3.6% from 2.4% and that slightly missed estimates of 3.5%. Without food and energy, core PCE rose 0.7% for the month, a little more than expected, with the year-over-year rate rising to 3.1% from 1.9%. That came in a little hotter than the 2.9% that analysts were looking for. Also from the BEA we learned that Personal Income fell 13.1% last month and that was slightly less than the 14.2% plunge that was expected as the effects of stimulus checks wane. Personal Spending still managed a monthly boost of 0.5% just as estimates suggested. For the Personal Savings Rate, that fell in April to 14.9% from 27.7%. We also learned that the deficit for the nation’s Trade Balance for Goods narrowed last month to minus $85.2B from minus $90.6B. That was a surprise for analysts looking for a widening to minus $92B.

Treasury prices have been little affected by the news with the Long Bond still yielding around 2.29%, the Ten-Year bringing 1.61%, and the Two-Year steady at 15 basis points. Crude oil’s rally continues with this morning’s half-dollar gain taking that price to $67.38 while gold has slipped a little bit to $1,891. DJIA futures are triple-digit green. A little later today, the University of Michigan will release its finalized May report for Consumer Sentiment.