The Fed’s preferred measure of inflation, Personal Consumption Expenditures (PCE), are out for the month of April. Results were positive across the board — eyebrow-raisingly so, in some cases. In fact, these figures have been strong enough to cut in half the pre-market plummet on the major indexes once President Trump posted “No more Mr Nice Guy” in his trade negotiations with China.
At this hour, the Dow is -114 points, the S&P 500 is -18, the Nasdaq -45 and the small-cap Russell 2000 is -10 points currently. The Dow, for instance, had fallen -244 points on the president’s latest Truth Social post. Bond yields, on the other hand, are ticking up early today: +4.44% on the 10-year, +3.93% on the 2-year and +4.95% on the 30-year bond.
PCE Report Positive Across Multiple Metrics
Personal Income for April reached its highest single-month level in four years: +0.8% — well above the +0.3% expected and even above the upwardly revised +0.7% for March. We now see income growth in 2025 among the highest in many years, averaging +0.65% over the past four months.
Consumer Spending, however, was in-line with expectations at +0.2% — half a point lower than the prior month’s +0.7%. This is good news in terms of demonstrating economic strength amid plenty of murkiness among outlooks, though not exactly a feather in the cap for those who’d like to see the Fed lower interest rates.
The PCE Index, month over month, was also as expected at +0.1%, up from the 0.0% reported the previous month. Year over year, +2.1% PCE is down 10 basis points (bps) from estimates. This also represents a low water mark last seen back in September of last year.
Core PCE month over month — stripping out volatile food and energy costs — was identical to the overall headline: +0.1%, following 0.0% the prior month. Year over year, core PCE dropped to +2.5%, 10 bps below estimates and 20 bps beneath the upwardly revised +2.7% for March.
Inventories Remain Relatively Undisturbed
Again considering our current environment, starting with early April’s opening salvo into the latest global trade war, Advanced Retail Inventories are steady and benign: -0.1% on headline, in-line with expectations and -0.1% reported a month ago. Advanced Wholesale Inventories was flat for April, down from the +0.4% seen in the March report.
Perhaps it will take some more distance from tariff Ground Zero to see how the new trade realities manifest in these reports. After all, these numbers are all subject to future revisions, and most of the tariff threats have yet been put on pause. But for now, it’s tough to find a complaint; things appear to be working on the more macro-level.
Advanced Trade Balance Cut in Half in One Month
Advanced Trade Balance in Goods for April came in well below expectations: -$87.6 billion, the lowest since September of 2023. Analysts had expected -$147 billion, following a slight trimming to -$162 billion the previous month. This is the first advance trade deficit sub-12 digits since October of last year.
At first blush, one would have to assume this has to do with the trade impact. Then again, as we see in the other data reflecting tariffs and trade, much of the grist has yet to meet the mill. But if this does prove to be a resonant part of our new trade scenario, it’s certainly a welcome one.
What to Expect from the Stock Market Today
Once the opening bell sounds on this final trading day for the week, the Chicago Business Barometer (PMI) for May is expected, as is final Consumer Sentiment, also for May. The former is expected to improve somewhat, though still come in sub-50, which is the tipping point between growth and loss. The latter is forecast to remain steady just over this 50 precipice.
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PCE Posts Highest Monthly Percentage Move in Four Years
The Fed’s preferred measure of inflation, Personal Consumption Expenditures (PCE), are out for the month of April. Results were positive across the board — eyebrow-raisingly so, in some cases. In fact, these figures have been strong enough to cut in half the pre-market plummet on the major indexes once President Trump posted “No more Mr Nice Guy” in his trade negotiations with China.
At this hour, the Dow is -114 points, the S&P 500 is -18, the Nasdaq -45 and the small-cap Russell 2000 is -10 points currently. The Dow, for instance, had fallen -244 points on the president’s latest Truth Social post. Bond yields, on the other hand, are ticking up early today: +4.44% on the 10-year, +3.93% on the 2-year and +4.95% on the 30-year bond.
PCE Report Positive Across Multiple Metrics
Personal Income for April reached its highest single-month level in four years: +0.8% — well above the +0.3% expected and even above the upwardly revised +0.7% for March. We now see income growth in 2025 among the highest in many years, averaging +0.65% over the past four months.
Consumer Spending, however, was in-line with expectations at +0.2% — half a point lower than the prior month’s +0.7%. This is good news in terms of demonstrating economic strength amid plenty of murkiness among outlooks, though not exactly a feather in the cap for those who’d like to see the Fed lower interest rates.
The PCE Index, month over month, was also as expected at +0.1%, up from the 0.0% reported the previous month. Year over year, +2.1% PCE is down 10 basis points (bps) from estimates. This also represents a low water mark last seen back in September of last year.
Core PCE month over month — stripping out volatile food and energy costs — was identical to the overall headline: +0.1%, following 0.0% the prior month. Year over year, core PCE dropped to +2.5%, 10 bps below estimates and 20 bps beneath the upwardly revised +2.7% for March.
Inventories Remain Relatively Undisturbed
Again considering our current environment, starting with early April’s opening salvo into the latest global trade war, Advanced Retail Inventories are steady and benign: -0.1% on headline, in-line with expectations and -0.1% reported a month ago. Advanced Wholesale Inventories was flat for April, down from the +0.4% seen in the March report.
Perhaps it will take some more distance from tariff Ground Zero to see how the new trade realities manifest in these reports. After all, these numbers are all subject to future revisions, and most of the tariff threats have yet been put on pause. But for now, it’s tough to find a complaint; things appear to be working on the more macro-level.
Advanced Trade Balance Cut in Half in One Month
Advanced Trade Balance in Goods for April came in well below expectations: -$87.6 billion, the lowest since September of 2023. Analysts had expected -$147 billion, following a slight trimming to -$162 billion the previous month. This is the first advance trade deficit sub-12 digits since October of last year.
At first blush, one would have to assume this has to do with the trade impact. Then again, as we see in the other data reflecting tariffs and trade, much of the grist has yet to meet the mill. But if this does prove to be a resonant part of our new trade scenario, it’s certainly a welcome one.
What to Expect from the Stock Market Today
Once the opening bell sounds on this final trading day for the week, the Chicago Business Barometer (PMI) for May is expected, as is final Consumer Sentiment, also for May. The former is expected to improve somewhat, though still come in sub-50, which is the tipping point between growth and loss. The latter is forecast to remain steady just over this 50 precipice.