Announced this morning, Personal Income increased 0.4% in April, lower than expected, and Personal Spending increased 0.9% in April, more than expected and the previous month was revised three tenths higher to 1.4%. Real Personal Spending, which accounts for inflation, was 0.7% higher for the month. Meanwhile, the PCE Deflator remains elevated, increasing 6.3% on an annual basis, slightly more than expected but it is three tenths lower than the previous month. The Core PCE Deflator, which excludes food and energy prices, grew 4.9% on an annual basis as expected and is also three tenths lower than the previous month.
Overall, healthy figures for income and spending highlighting a consumer that hanging in there despite a challenging environment with higher prices. Inflation is still elevated but annual measures were lower than the previous month due to base effects and consumers continuing to shift their spending from goods to services as we move into the summer season. The Federal Reserve should remain on track with their policy tightening in the months ahead.
In all, the 10-year US Treasury yield ticks a bit higher following the report and equity futures are also higher as we head into the market open.
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