There were two problems with this morning’s PCE print. First, PCE is stuck at 0.3%. Although down from 0.4% in January, it’s still well above November’s 0.0% and December’s 0.1%. Core also repeated Feb’s 0.3% reading (2.8% YoY.)
Second, growth in expenditures continue to outstrip those in income. At some point – and especially now that COVID bonuses are generally depleted – this will increasingly curtail folks’ ability to spend. From the bulls’ standpoint, that’s not a drain we want the economy to circle.
But, VIX sold off sharply for the 5th session in a row, the 10Y fell back from yesterday’s highs, and USDJPY even got into the act. So, futures are up nicely.
As we wrote yesterday: “If the 10Y can hold these levels and if PCE comes in on target tomorrow, then ES has a shot at holding the SMA100.” The 10Y did hold, and PCE is close enough to on target, so ES is enjoying a nice bounce off its SMA100 – at least as long as folks don’t think too much about yesterday’s data.
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