U.S. Dollar and Treasury Yields Rise After PCE Inflation Rises In April; Bolsters Case For Rate Hike


The dollar is rising against the Japanese yen and U.S. Treasury yields are jumping today following the release of the Federal Reserve’s preferred inflation gauge, Personal Consumption Expenditures (PCE), that showed a higher than expected inflation level in April which bolsters the case for an interest rate hike at the Fed’s next policy meeting in mid-June.

The yield on the U.S. 10 yr. Treasury is up 1.90 percent or 0.04 to 1.89 following today’s release of April PCE inflation from the Bureau of Economic Analysis that showed the price index for PCE increased 0.3 percent in April, up from 0.1 percent in March.

Excluding food and energy, the PCE price index increased 0.2 percent in April, matching a consensus estimate from briefing.com, and higher than 0.1 percent in March.

The April PCE price index is up 1.1 percent from April a year ago.

Excluding food and energy, the Core April PCE price index increased 1.6 percent from April a year ago, and is inching closer to the Fed’s 2 percent inflation target.

Real PCE increased 0.6 percent in April, up from a decrease of less than 0.1 percent in March.

Personal income increased or 0.4 percent in April to $69.8 billion while disposable personal income (DPI) increased 0.5 percent, according to the Bureau of Economic Analysis.

Wages and salaries increased $38.6 billion in April, up from $30.7 billion in March.

Private wages and salaries increased $37.2 billion, up from $27.6 billion in March.

Purchases of durable goods increased 2.2 percent in April, well above an increase of  0.2 percent in March.

Purchases of motor vehicles and parts accounted for the majority of the increase in April.

Written By: Johnathan Schweitzer



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