US core PCE report
  • Prior was +4.6% (revised to 4.7%)
  • PCE core MoM +0.3% vs +0.3% expected
  • Prior MoM +0.3%
  • Headline inflation PCE +4.2% vs +4.6% prior (Prior revised to 4.7%)
  • Deflator MoM +0.1% vs +0.3% prior

Consumer spending and income for March:

  • Personal income +0.3% vs +0.2% expected. Prior month +0.3%
  • Personal spending 0.0% vs -0.1% prior
  • Real personal spending 0.0% vs -0.1% expected (prior +0.2%)

The inflation numbers in the Q1 GDP report yesterday were high and that may have put an upward bias into this data point. I'm not surprised to see the revisions higher in the Feb inflation numbers given the GDP print and I don't think the market will be overly shocked by these numbers. Notably, headline inflation is falling quickly and could have a three-handle as soon as next month.

The dollar hasn't moved much on this report, so I think the hawkish tilt was already priced in. The Fed is still on track to hike next week but the question will be how explicitly they hint at a pause beyond that.

Yields are also lower after the data in a strong sign that the market is no longer worried about inflation.