Highlights of the personal income and spending report:
- Prior was +0.2%
- Personal income 0.0% vs +0.3% expected
- Prior personal income +0.3%
The spending number is in-line and that suggests the consumer remains healthy but the income side of the equation is soft and that's not a great sign.
Inflation:
- PCE deflator +1.3% vs +1.4% y/y expected
- Deflator +0.2% m/m vs +0.3% expected
- Core PCE +1.6% vs +1.7% y/y expected
- Core PCE +0.1% vs +0.1% m/m expected
This is going to encourage the Fed to keep rates low for longer. That's good for risk assets globally and a modest USD negative. However at this point, growth expectations are more of a driver than inflation.
