April PCE inflation figure unexpectedly rises

Persistent inflation figures rebound yet again leaving markets slightly concerned for June

By Nadia Elbilassy | @Nadia Elbilassy | 26 May 2023

  • April PCE inflation figure rises to 4.4%, raising concerns and potential for rate hikes

  • US stocks open higher, led by tech sector and Nvidia's strong results

  • US dollar slightly down but on track for third weekly gain on rate hike expectations

The unexpected PCE figure

April saw a rebound in the Federal Reserve's preferred inflation gauge, emphasizing Fed Chair Jerome Powell's cautionary words about the potential challenges of managing price increases.

The Personal Consumption Expenditures (PCE) price index, released by the Commerce Department, showed a 4.4% rise for the 12 months ending in April, slightly higher than the 4.2% increase recorded in March.

Additionally, on a monthly basis, prices experienced a modest uptick of 0.4%. This data suggests that inflation remains a persistent concern, possibly increasing the likelihood of future interest rate hikes. As Powell has previously highlighted, navigating this inflationary landscape could be a complex and an unpredictable journey.

The stock market

US Stocks have already been on an upbeat momentum on apparent progress toward the debt ceiling deal and have opened marginally higher.

The tech sector had already bloomed overnight as the Nasdaq closed 1.7% higher on the back of Nvidia’s staggering quarterly results.

The dollar

The U.S. dollar showed a slight decline during early European trading on Friday; however, it remained on track for its third consecutive weekly gain. This upward momentum for the dollar is attributed to growing expectations of interest rate hikes.

As investors anticipate tightening monetary policy by the U.S. Federal Reserve, the dollar has been strengthening. This development underscores the market's increasing belief that higher interest rates could be implemented in June, supporting the currency's recent gains.