July 30, 2021 Headlines

A weaker than expected Q3 earnings report by Amazon is fueling a tech selloff and modest risk-off trade to end the week. NASDAQ futures are down 1.1% at the moment, and Treasury yields are 2-3 basis points lower in early trading. Personal income and spending for June were largely in line with expectations after accounting for revisions to May, and core PCE rose 0.4% m/m in June (0.5% expected) and 3.5% y/y (3.7% expected). On the wage inflation front, the Employment Cost Index (ECI) rose 0.7% in the second quarter, down from 0.9% the prior quarter (and 0.9% expectations). ECI is a preferred measure of wage inflation by the Fed given that it is a more comprehensive compensation gauge including bonuses and benefits, and for above-target inflation to become more sticky (i.e., non-transitory), many economists consider wage inflation to be a prerequisite. While 0.7% quarterly growth is above average for the post-2008 era (0.56%), it’s on top of the average since records began in 1995 (0.69%).

Jason Haley
Chief Investment Officer

7/30/2021Employment Cost Index0.90%0.70%0.90%
7/30/2021Revisions: Personal Income and Outlays
7/30/2021Personal Income-0.30%0.10%-2.00%-2.20%
7/30/2021Personal Spending0.70%1.00%0.00%-0.10%
7/30/2021Real Personal Spending0.30%0.50%-0.40%-0.60%
7/30/2021PCE Deflator MoM0.60%0.50%0.40%0.50%
7/30/2021PCE Deflator YoY4.00%4.00%3.90%4.00%
7/30/2021PCE Core Deflator MoM0.60%0.40%0.50%
7/30/2021PCE Core Deflator YoY3.70%3.50%3.40%
7/30/2021MNI Chicago PMI64.266.1
7/30/2021U. of Mich. Sentiment80.880.8
7/30/2021U. of Mich. Current Conditions84.584.5
7/30/2021U. of Mich. Expectations78.478.4
7/30/2021U. of Mich. 1 Yr Inflation4.80%4.80%
7/30/2021U. of Mich. 5-10 Yr Inflation2.90%


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