© Reuters. FILE PHOTO: A woman shops in a supermarket as rising inflation affects consumer prices in Los Angeles, California, U.S., June 13, 2022. REUTERS/Lucy Nicholson
NEW YORK (Reuters) – U.S. consumer spending increased more than expected in April, boosting the economy’s growth prospects for the second quarter, and inflation picked up, which could see the Federal Reserve keeping interest rates higher for some time.
The Commerce Department said on Friday that the personal consumption expenditures (PCE) price index increased 0.4% in April after rising 0.1% in March. Year to date, the PCE price index increased 4.4% after advancing 4.2% in March.
Excluding the volatile food and energy components, the PCE price index climbed 0.4% after rising 0.3% in March. The so-called core PCE price index increased 4.7% on a year-on-year basis in April after gaining 4.6% in March. The Fed tracks the PCE price indexes for its 2% inflation target.
STOCKS: were up 0.1%
BONDS: The yield on rose and was up 1.6 basis points at 3.831%; The two-year U.S. Treasury yield, rose and was up 7.9 basis points at 4.589%
FOREX: The Euro pared a gain and was up 0.09% and the was off slightly
PRIYA MISRA, HEAD GLOBAL RATES STRATEGY, TD SECURITIES, NEW YORK
“Strong both personal spending and income data, as well as more importantly, PCE and inflation. It was driven by core services ex-shelter, which we know the Fed cares about. It’s the one they’ve been tracking closely, and there’s not sign of that slowing down. That’s why the market is fully pricing in a hike in the next two meetings: 13 bps in June and 12 bps in July. The reason it’s still split is this idea of a skip, that some Fed officials feel they want a little more time. And that’s why they might skip in June and hike in July. But I think they have two things ahead. The debt ceiling gets resolved and you get a solid payrolls. Anything above 100,000 will mean a 25 bps hike is almost a done deal.”
BRIAN JACOBSEN, CHIEF ECONOMIST, ANNEX WEALTH MANAGEMENT, MENOMONEE FALLS, WISCONSIN“Why position for a recession that has already happened? Gross domestic income fell two quarters in a row. Inflation is still too hot to handle, but it’s beginning to simmer down. Now that credit is tightening and the Fed is likely to hold rates high for longer than necessary, it could be a tough slog. A portfolio for tough times is very different than a portfolio for bad times. We can ride the…
Click Here to Read the Full Original Article at All News…