#USCorePCEMay

Here are the May U.S. Core PCE inflation figures:

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📈 May Core PCE Highlights

Month-over-month gain: +0.2%, up from +0.1% in April.

Year-over-year increase: +2.7%, up from +2.6% in April; this slightly exceeded analysts’ forecasts .

In comparison, headline PCE rose 0.1% MoM and 2.3% YoY .

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🔍 Key Context & Implications

1. Economist Insights

Core PCE exceeded expectations, tempering optimism for a June or July Fed rate cut .

The Fed remains cautious, eyeing inflation persistence—particularly in light of rising tariffs .

2. Consumer Behavior

Personal spending fell 0.1% MoM in May, and incomes dropped 0.4%, signaling potential economic cooling .

3. Market Reaction

Despite the slightly elevated inflation, equities (S&P 500, Nasdaq) hit record highs.

Treasury yields softened, reflecting concerns about softer growth .

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🏦 What This Means for the Fed

The core PCE at 2.7% remains above the Fed’s 2% target, likely delaying any rate cuts.

Policymakers are set to remain on hold at their current 4.25–4.50% target range, waiting for more economic clarity .

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✅ Bottom Line

May’s Core PCE print was a bit hotter than desired, reinforcing the Fed's cautious stance. Although consumer spending is softening, inflation remains sticky enough that rate cuts are unlikely until later this year—possibly not before September.

Let me know if you'd like a historical comparison, policy outlook, or implications for stocks and bonds.

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