Treasury yields fell after spending data came in lower than expected with the front-end and belly 9 to 10 bps lower. Personal spending data showed a 0.2% increase in May, half of the median forecast, and April’s number was revised lower to 0.6% from 0.9%. The decline in consumer spending suggests that the Fed’s tightening is taking hold but also highlights the difficulty of achieving a soft landing.
Both headline and core PCE price indices rose less than expected in May. Headline was up 0.6% vs 0.7% expected while core was up 0.3% vs 0.4% expected. While May showed inflation moderating somewhat, it’s unlikely to have much impact on the Fed’s decision making at the July meeting.
As a reminder, the bond market will be closing early tomorrow at 2 PM EDT ahead of the Independence Day holiday on Monday.
Hafizan Hamzah
Senior Director, Investment Management Group
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