PCE report coming up
The Fed's preferred measure of inflation is coming up.
The PCE report is expected to show core and inflation both up 1.6% year-over-year. That's well below the Fed's target and the worry is that it's slowing even further.
Yesterday's GDP report pegged inflation in Q1 at just 1.0% annualized compared to 1.3% expected. That adds some downside risks to today's report and I expect that the market has already priced in a miss to the downside of 1-2 ticks.
The report also has lines on consumer spending and income and those will also be market movers.
At the moment, the 5-year note is yielding just 1.96%, down 6 bps on the day. That's the lowest since October 2017 and compares to effective Fed funds at 2.38%.
