Here’s a concise update on the May US Core PCE data:
---
📈 Key Inflation Takeaways
Core PCE year‑over‑year jumped to 2.7%, up from 2.6% in April and exceeding expectations — the highest since February .
Monthly Core PCE rose 0.2%, doubling the consensus estimate of 0.1% .
Headline #PCE $PCE (including food & energy) climbed 2.3% YoY, with a modest 0.1% increase on the month .
---
🧩 Underlying Details
Core services inflation (e.g., shelter, healthcare) remains sticky, continuing to drive the broader trend .
Consumer spending fell 0.1% MoM—the first drop in 2025—while personal income declined 0.4%, influenced by timing adjustments in Social Security payouts .
Tariff impacts: There are early signs tariffs are filtering into prices, but much of the import surge likely occurred before duties took effect .
---
🏦 Implications for the Fed & Markets
The Fed’s preferred inflation gauge being “sticky” at 2.7% may delay anticipated rate cuts, now unlikely before September or later .
Markets are adjusting: Treasury yields ticked up, S&P futures were modestly down, and the dollar strengthened as investors manage a “higher for longer” scenario .
---
🧾 Summary:
Core PCE at 2.7% YoY with 0.2% MoM gain signals inflation persistence.
Cooling consumer income and spending add complexity.
Rate cuts likely delayed; Fed pivot to wait-and-see, with possible first cut in late 2025.
---
Let me know if you'd like a deeper breakdown by components (goods vs. services) or historical perspective!