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%).
Chief Investment Officer
|7/30/2021||Employment Cost Index||0.90%||0.70%||0.90%||—|
|7/30/2021||Revisions: Personal Income and Outlays|
|7/30/2021||Real Personal Spending||0.30%||0.50%||-0.40%||-0.60%|
|7/30/2021||PCE Deflator MoM||0.60%||0.50%||0.40%||0.50%|
|7/30/2021||PCE Deflator YoY||4.00%||4.00%||3.90%||4.00%|
|7/30/2021||PCE Core Deflator MoM||0.60%||0.40%||0.50%||—|
|7/30/2021||PCE Core Deflator YoY||3.70%||3.50%||3.40%||—|
|7/30/2021||MNI Chicago PMI||64.2||—||66.1||—|
|7/30/2021||U. of Mich. Sentiment||80.8||—||80.8||—|
|7/30/2021||U. of Mich. Current Conditions||84.5||—||84.5||—|
|7/30/2021||U. of Mich. Expectations||78.4||—||78.4||—|
|7/30/2021||U. of Mich. 1 Yr Inflation||4.80%||—||4.80%||—|
|7/30/2021||U. of Mich. 5-10 Yr Inflation||—||—||2.90%||—|
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