Macro Core PCE (Personal Consumption Expenditure, which strips out volatile food and energy items) rose by just 0.08% in May, the least since late 2020. Wages rose by 0.7% and real disposable income by 0.5%, while savings rates rose by 3.9%. The economy is normalizing with a balanced job market, persistent growth and moderating inflation. This result may provide affirmation that inflation is moving in the right direction and that the…

Macro Year-over-year (YoY) Consumer Price Index (CPI) has not reached a new low in the past year, bottoming out at 3% a year ago. Persistent inflation results from robust growth and a tightening cycle without even a soft recession. While CPI remains far from the FED’s target, Core Personal Consumption Expenditures (PCE) is more likely to approach 2%, though this might not happen this year. The FED argues that the…

Macro The US economy has demonstrated exceptional resilience in the face of aggressive monetary tightening. This is further underscored by the emergence of increased productivity and the early signs of an economic boost from AI. While the US maintains its supremacy in the long run, driven by innovation, leadership in cutting-edge technologies, control of the world’s reserve currency, energetic independence, private property and the rule of law, and vibrant capital…

Macro US payroll came stronger than expected (272,000 vs 190,000 expected), sending yields up and rate cut expectations further away into December. Also, The unemployment rate derived from the Household Survey conducted by BLS (the Bureau of Labor Statistics) stayed at 4% (6.6m compared to 3.7% and 6.1m unemployed a year earlier) while part-time employment far outpaced full-time positions. However, JOLTS (Job Openings and Labor Turnover Survey) from earlier this…

Macro This week, risk assets came under pressure as Wednesday’s CPI report exceeded expectations, marking 3rd increase in a row. Since the FED is facing three reports now, it will be easier to argue for the rate cuts before the fall if significant CPI improvements are in the upcoming April and May reports. The increases, however, came from the ‘stubborn’ components such as shelter and auto insurance, while the median…

Macro The US labour market remains very strong, with this week’s payroll report reflecting 303,000 jobs added in March (vs 214k estimated), with the unemployment rate and average hourly earnings (MoM) as expected at 3.8% and 0.3%, respectively. Such a report suggested that the economy is still booming and that in this economic environment, the neutral rate of interest is much higher than it used to be in the recent…