Fed Inflation Gauge Slows Further In April, Adding to ‘Peak’ Consumer Prices Bets

The Federal Reserve’s preferred measure of U.S. inflation eased further from multi-decade highs last month, data indicated Friday, adding to investors hopes that consumer price pressures have peaked in the world’s biggest economy.

The April core PCE Price Index rose 4.9% from last year, easing from the highest levels since 1983, and 0.3% on the month, the Bureau of Economic Analysis reported, a figure that was largely in line with Wall Street forecasts and continues to indicate signs of easing consumer price pressures. The March increase estimate was confirmed at 0.3%.

The headline PCE index was up only 0.2% on the month and 6.3% on the year, down from the highest levels since 1980. Personal income rose by a slower-than-expected pace of 0.3%, while personal spending rose 0.9%, the BEA noted, just ahead of the Street consensus forecast of a 0.7% advance.

The Bureau of Labor Statistics said earlier this month that its headline consumer price index for the month of April rose 8.3% from last year, down from the 8.5% pace in March – the fastest rate since December of 1981. On a monthly basis, inflation was up 0.3%, the BLS said, compared to the March surge of 1.2%

The CME Group’s FedWatch tool is showing a 97.6% chance of a 50 basis point rate hike in June, as well as a 93.3% chance of follow-on move of 50 basis points in July.

Stock Market Today – 5/27: Stocks Edge Higher On ‘Fed Pause’ Bets; Retail Earnings Mixed

Stocks on Wall Street futures extended gains following the data release, with futures tied to the Dow Jones Industrial Average indicating a 100 point opening bell decline and those linked to the S&P 500, which is down 14.8% for the year, are priced for a 22 point move to the upside.

Benchmark 10-year U.S. Treasury bond yields edged higher, to 2.74% while the US dollar index, which tracks the greenback against a basket of six global currencies, fell further to a one-month low of 101.678.

The Atlanta Federal Reserve’s GDPNow forecasting tool, a real-time benchmark, suggests U.S. economic growth is growing at a 1.8% clip, while the Commerce Department’s second estimate of first quarter growth showed a contraction of 1.5%, the first in two years.

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