PCE matches expectations as gold holds steady around $2,360

PCE at 2.7% YoY, matching both expectations and the previous month

By Farah Mourad | 31 May 2024

Market close
  • U.S. short-term interest-rate futures rose

  • Gold prices held around $2,360

The latest U.S. Personal Consumption Expenditures (PCE) data for April presents a mixed picture of the economy, showing consistency with expectations but also hinting at potential consumer weakness. Here's a breakdown of the key data points:

PCE Inflation Data

  • Headline PCE (annual): 2.7% YoY, matching both expectations and the previous month's rate.
  • Headline PCE (monthly): 0.25% MoM, also aligning with expectations, but slightly down from the previous month's 0.3% increase.
  • Core PCE (annual): 2.8% YoY, in line with the prior month, slightly above the expected 2.76%.
  • Core PCE (monthly): 0.249% MoM, close to the expected 0.25%, but lower than the previous month's 0.3%.

Personal Income and Spending

  • Personal Income: Increased by 0.3% MoM, as anticipated, though this marks a decrease from the 0.5% rise in the previous month.
  • Consumer Spending: Rose by 0.2% MoM, below the expected 0.3% and significantly down from the previous month’s 0.8% increase.
  • Real Personal Consumption: Declined by 0.1% MoM, against an expected increase of 0.1%, and down from a 0.5% rise in the previous month.

Market Reactions

Following the release of the PCE data, U.S. short-term interest-rate futures increased as traders speculated on potential Federal Reserve rate cuts. The data indicated a slowdown in consumer spending and weakening real consumption, suggesting a slightly weaker consumer outlook.

Gold and Dollar

  • Gold: Prices remained strong around $2,360, supported by the PCE data meeting expectations and U.S. yields trading lower.
  • EUR/USD: The pair gained momentum, targeting 1.0900 as the U.S. dollar faced increased selling pressure in the wake of the inflation data.

Canadian GDP Data

  • Canadian GDP (Q1 2024): Grew at an annualized rate of 1.7%, falling short of the 2.2% estimate.

Overall, the PCE data indicates steady inflation but reveals signs of slowing consumer spending and real consumption, impacting market expectations and movements across various sectors.