#USCorePCEMay

In May, core PCE inflation (excluding food and energy) rose 0.2%, doubling forecasts, with the annual rate hitting 2.7%, above April’s 2.6% and the Fed’s 2% target.

Personal income dropped 0.4%, and consumer spending fell 0.1%, suggesting economic slowdown.

Equity markets surged, with the S&P 500 and Nasdaq logging record highs, while Treasury yields eased and the dollar weakened ~0.25%

Fed implications: The hotter core PCE likely delays a July rate cut, pushing expectations to September.