Bankinter: The Personal Consumption Expenditure deflator was up 2.5% in June versus +2.5% expected and +2.6% previous. Underlying rate +2.6% versus +2.5% expected and +2.6% previous; (ii) Personal Income +0.2% month-on-month in June versus +0.4% estimated and +0.4% previous (revised from +0.5%); (iii) Personal Spending +0.3% m/m versus +0.3% estimated and +0.4% previous (revised from +0.2%).
Analysis team’s opinion: Good news for bonds, although with a moderate impact on stock markets, which are currently awaiting the results of large US tech companies. The PCE is the main inflation benchmark for the Fed, and is already close to its target level (2%). This, together with the moderation in personal income and spending, which point to lower inflationary pressures, keeps expectations of an early Fed rate cut (possibly in September?) alive.
