In this morning’s data, Personal Income decreased -13.1% in April, a bit less negative than expected and follows a 20.9% increase the previous month given the timing of stimulus payments. Personal Spending increased 0.5% in April, as expected and follows a rise of 4.7% in March. The April PCE Deflator, increased 0.6% in the month and has increased 3.6% on an annual basis. The Core PCE Deflator, which excludes food and energy prices, increased 0.7% in April and grew 3.1% on an annual basis, higher than expected. Overall, monthly income figures remain affected by the timing of stimulus payments, but still show a positive multi-month trend. Spending increased more than income last month, but personal savings have grown in past months, which may be an important component for individual’s desire to spend as the economy
reopens further. Inflation measures have elevated in recent weeks, which is confirmed by the PCE Deflator data points this morning, but it remains to be seen if inflation will embed itself into spending habits and wages in the months ahead. In all, bond yields are little-changed and equity futures are higher as we head into the market open.
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