Nasdaq 100 futures extend gains as Fed’s favorite inflation gauge cools to 4.9%

KEY POINTS OF THE PCE REPORT:

  • Consumer spending in the United States in April rose by 0.9% against 0.7% expected
  • The Core PCE, the Fed’s preferred measure of inflation, climbs 0.3% month over month and 4.9% from a year earlier, in line with expectations
  • Nasdaq 100 Futures Contracts to deploy themselves pre-marketing earnings as traders celebrate signs that household consumption remains healthy and price pressures are starting to ease

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The U.S. Bureau of Economic Analysis released its latest report on personal consumption spending this morning. According to the agency, April personal spending rose 0.9% month-over-month vs. 0.7% expected – a sign that the US consumer remains resilient and still has gas in the tank for propel expanding, assistance partly by the robust labor market, some wage gains and increased savings accumulated during the pandemic.Strong consumer spending early in the second quarter may help ease fears of a recession, as household consumption is the main driver of US economic activity.

Elsewhere, the PCE price index, which measures the costs that people living in the United States pay for a variety of different items, up slightly from 0.2% month over month and 6.3% Year after year. During this time, the basic PCE indicatorthe Federal Reserve’s favorite inflation indicator which excludes food and energy and is used to make monetary policy decisions, rose 0.3% on a seasonally adjusted basis, bringing the annual reading to 4.9% from 5.2% in Marchin accordance with consensus expectations.

PCE REPORT DETAILS

Source: DailyFX Economic Calendar

The encouraging data boosted sentiment and confirmed the belief that inflationary pressures likely peaked in the first quarter and are slowly beginning to ease amid tighter financial conditions and a favorable basis for comparison. While the directional improvement in the PCE is welcome, it is unlikely to cause the Fed to deviate from its plans for early interest rate hikes in 50 basis point increments at its next two meetings. – after all, the bank has indicated that it will stay the course until there is clear and convincing evidence that inflation is falling.

Immediately after the Personal Consumption Expenditures report crossed the wires, Nasdaq 100 futures extended pre-market gains as Wall Street celebrated signs that household consumption remains healthy and pressures on stocks prices are starting to calm down. If annual inflation continues to decline in the coming months, the FOMC may consider slowing or pausing its tightening cycle in the second half of the year, as Atlanta Fed Chairman Raphael Bostic has said. suggested, creating a more favorable environment for risky assets.

NASDAQ 100 FUTURES

Nasdaq 100 Futures Chart

Nasdaq 100 chart prepared using TradingView

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—Written by Diego Colman, Market Strategist for DailyFX

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