The latest reading from the Federal Reserve's favored inflation measure, PCE, offers glimmers of hope, but is failing to calm the nerves of investors.
The latest reading from the Federal Reserve’s favorite price gauge, which contains some signs of cooling, is failing to calm the nerves of traders and investors who are fretting about a possible recession, higher interest rates and inflation that’s simply not coming down fast enough.U.S. stocks fell off sharply Thursday morning after the release of May’s inflation data, while investors flocked to the safety of Treasurys in a classic risk-off response to fears of slowing growth.
While the initial take from the release of May’s so-called personal-consumption price index was focused on signs of easing price pressures in the narrower core measure, which excludes food and energy, the overall monthly PCE reading still rose 0.6% last month and was triple the 0.2% gain in April. In addition, the headline rate of inflation over the past year was unchanged at 6.3%.
Read: First Wall Street bank to call a U.S. recession now sees chance that inflation fails to decelerate “Here we are at the end of June and this is May data,” the economist said. Though the monthly core PCE reading rose by 0.3% for the fourth month in a row — less than Wall Street’s 0.4% forecast — the momentum behind those numbers actually went up, he said. If stretched out to three digits, the rise in core PCE was 0.303% in February, 0.336% in March, 0.334% in April, and 0.348% May, based on calculations from the U.S.
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