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The May annualized trimmed mean reading of PCE inflation from the Dallas was 2.0%, down from 2.7% in April.

This article was written by Adam Button at www.forexlive.com.

US Treasury Secretary Scott Bessent said something interesting on trade on Fox Business today:

“If we can ink 10 or 12 of the important 18 — there are another important 20 relationships — then I think we could have trade wrapped up by Labor Day,” Bessent said

Labor Day falls on September 1 this year.

Now this might be fanciful as the ’90 days in 90 days’ post-Liberation Day plan has completely fallen apart. The US has already laid the groundwork for punting on the July 9 ‘deadline’ as well.

That’s not to say all the deals will be papered and completed but we could at least have an idea on tariff levels without any big risk of surprise. That would certainly be positive for markets even if I find it hard to believe that Trump would ever stop threatening tariffs.

A separate report from Fox Business’ Charlie Gasparino today also indicated that trade deals were near, though he cautioned that had been reported many times before.

It’s also worth flagging that trade remains a big risk and deals or negotiations could blow up with retaliation from partners, particularly on steel and autos.

This article was written by Adam Button at www.forexlive.com.

• May prelim was 60.5
• Final April reading was 52.2
• Current conditions 64.8 vs 63.7 prelim
• Expectations 58.1 vs 58.4 prelim
• One -year inflation 5.0% vs 5.1 prelim
• Five-year inflation 4.0% vs 4.1% prelim

Sentiment has rebounded from the April-May lows but still remains far below the levels from late 2024. The market reaction to the report has been minimal.

This article was written by Adam Button at www.forexlive.com.

The S&P 500 has hit a record high for the first time since February and the Nasdaq hit a record high for the first time since December.

It’s been a remarkable comeback for the Nasdaq since April and if we can close at new highs, there are blue skies above.

The interesting one to watch next is the Russell 2000, which still needs to rally 13.5% to get back to October levels. It’s was up a hefty 1.7% yesterday.

This article was written by Adam Button at www.forexlive.com.

The euro has perked up to a fresh session high, which is also a fresh high since 2021 at 1.1747.

The pair has risen about 30 pips since the US released PCE data for May. The report showed slightly hotter core inflation than anticipated while spending/income both unexpectedly deteriorated. That’s the kind of data that could be put the Fed in a bind. If the economy is slowing it calls for rate cuts but the Fed can’t lower rates if inflation is also creeping up and remains above target.

For now, Fed officials have signalled cut quarter-point cuts in the remainder of this year via the dot plot, but that was a narrow majority with many seeing just one cut. In contrast, the market has priced in 65 bps in easing, perhaps sensing that the slower economy will ultimately win out.

Notably, this isn’t the first sign of consumer softening this year. Target last month highlighted a weakening consumer and yesterday, Circle-K owner Couche-Tard highlighted a struggling US consumer in the ‘lower end’ and ‘lower middle end’.

“Softness in traffic and fuel demand in the United States as low-income consumers were impacted by challenging economic conditions,” said CFO Filipe Da Silva.

To be fair, many other companies have said the consumer is fine but this week’s US Q1 GDP report also showed a weaker consumer.

This article was written by Adam Button at www.forexlive.com.

The S&P 500 needs to rise 7 points to touch a new record high and break February’s peak of 6147. It looked like a sure thing a few hours ago but futures have faded somewhat and are pointing to an 11 point gain at the open.

Shares of Nike will lead the way with a 10% premarket gain as tariffs hit margins less than feared.

This article was written by Adam Button at www.forexlive.com.

Core:

• Prior was +2.5%
• Core m/m 0.2% vs +0.15% exp
• Unrounded core PCE +0.1788%
• Supercore (services ex-shelter)
• Services inflation

Headline PCE:

• Headline PCE +2.3% y/y vs +2.3% expected
• Deflator +0.1% m/m vs +0.12% expected
• Unrounded m/m +0.1358%

Consumer spending and income for March :

• Personal income -0.4% vs +0.3% expected. Prior month +0.8%
• Personal spending -0.1% vs +0.1% expected. Prior month +0.2%
• Real personal spending -0.3% vs +0.1% prior
• Savings rate

USD/JPY was trading at 144.58 ahead of the data.

This isn’t a great report on a couple fronts. The headline was in-line (though a touch high unrounded) but core was hotter than expected. The income side was weak and so was spending, which fits in with some of the corporate commentary we’ve heard (like Target).

This article was written by Adam Button at www.forexlive.com.

• Prior month +0.1% (revised to +0.2%)
• Advanced estimate for the month of May -0.1%

The goods-producing industries were down 0.6% in April, with the manufacturing sector accounting for nearly all the decline. The
services-producing industries edged up 0.1% in April.

Public
administration, finance and insurance, and the arts, entertainment and
recreation sectors contributed the most to the increase, while the
wholesale trade sector was the largest detractor to growth.
Overall, 10 of 20 industrial sectors expanded in April.

This article was written by Giuseppe Dellamotta at www.forexlive.com.

The latest print on US inflation is due at the bottom of the hour. So far, the inflation hit from tariffs has been modest and the market is sanguine but that could change in short order. Given that we’ve seen May CPI already, I don’t think there are any big surprises coming today though. The consensus is 2.3% y/y on the headline and 2.6% y/y on core.

The other notable part of the release is on personal consumption and it could end up being the market mover. The consensus is +0.1% m/m but yesterday’s GDP report (albeit for Q1) showed surprising weakness in consumption that hasn’t (yet?) showed up in many official data points.

Along with the US report, we also get the Canadian GDP reading for April.

This article was written by Adam Button at www.forexlive.com.

• After 10 or 12 deals, there are 20 more important ones.

The Labor Day in the US is on September 1st and he’s obviously alluding here that there’s no deadline in July. So basically there’s no deadline at all.

This article was written by Giuseppe Dellamotta at www.forexlive.com.

• Official data so far reveals only modest impact of tariffs on prices, activity, labor market.
• If the Fed cuts in September and tariff effect shows up later, could pause rate cuts.
• Inflation boost is likely coming, but actual inflation indicates renewed progress towards 2% target.
• More time is needed to determine if effects of trade war are delayed, or if it will be smaller than thought.
• Emphasis must be on actual inflation, real economic data without committing to an easing policy path in case tariff effects delayed.

There’s nothing new here from Kashkari. He’s been on this camp for a while.

This article was written by Giuseppe Dellamotta at www.forexlive.com.

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