After two manic trading days, the market has settled in with Treasuries opening this morning slightly flatter. The rally in risk assets stalled out as continued trade tensions between the US and China weighed on the market.

Consumer spending increased by the largest rate in five months, coming in at 0.6% vs 0.5% expected. Additionally, the Fed’s preferred measure of inflation, PCE, increased by 2% from the prior year; putting it right in line with the central bank’s target. Core PCE, which excludes food and energy came in at 1.8%, just shy of the Fed’s 2% target. Overall, the report points to the Fed being able to raise rates gradually, but given the current pace of inflation, they shouldn’t have much reason to increase the rate of tightening.

Hafizan Hamzah
Director, Investment Management Group

05/29S&P CoreLogic CS 20-City MoM SA0.75%0.53%0.83%0.84%
05/29S&P CoreLogic CS 20-City YoY NSA6.45%6.79%6.80%6.76%
05/29S&P CoreLogic CS 20-City NSA Index208.62206.67206.57
05/29S&P CoreLogic CS US HPI NSA Index198.94197.01197.29
05/29S&P CoreLogic CS US HPI YoY NSA6.53%6.34%6.51%
05/29Conf. Board Consumer Confidence128128128.7125.6
05/29Conf. Board Present Situation161.7159.6157.5
05/29Conf. Board Expectations105.6108.1104.3
05/29Dallas Fed Manf. Activity23.826.821.8
05/30MBA Mortgage Applications-2.90%-2.60%
05/30ADP Employment Change190k178k204k163k
05/30GDP Annualized QoQ2.30%2.20%2.30%
05/30Personal Consumption1.20%1.00%1.10%
05/30GDP Price Index2.00%1.90%2.00%
05/30Core PCE QoQ2.50%2.30%2.50%
05/30Advance Goods Trade Balance-$71.0b-$68.2b-$68.0b-$68.6b
05/30Retail Inventories MoM0.60%-0.40%-0.70%
05/30Wholesale Inventories MoM0.50%0.00%0.30%0.20%
05/30U.S. Federal Reserve Releases Beige Book
05/31Challenger Job Cuts YoY-4.80%-1.40%
05/31Personal Income0.30%0.30%0.30%0.20%
05/31Personal Spending0.40%0.60%0.40%0.50%
05/31Real Personal Spending0.20%0.40%0.40%0.50%
05/31PCE Deflator MoM0.20%0.20%0.00%
05/31PCE Deflator YoY2.00%2.00%2.00%
05/31PCE Core MoM0.10%0.20%0.20%
05/31PCE Core YoY1.80%1.80%1.90%1.80%
05/31Initial Jobless Claims228k221k234k
05/31Continuing Claims1733k1726k1741k1742k
05/31Chicago Purchasing Manager58.357.6
05/31Bloomberg Consumer Comfort55.2
05/31Pending Home Sales MoM0.40%0.40%
05/31Pending Home Sales NSA YoY-4.40%
06/01Change in Nonfarm Payrolls190k164k
06/01Two-Month Payroll Net Revision
06/01Change in Private Payrolls190k168k
06/01Change in Manufact. Payrolls20k24k
06/01Unemployment Rate3.90%3.90%
06/01Underemployment Rate7.80%
06/01Average Hourly Earnings MoM0.20%0.10%
06/01Average Hourly Earnings YoY2.60%2.60%
06/01Average Weekly Hours All Employees34.534.5
06/01Labor Force Participation Rate62.80%
06/01Markit US Manufacturing PMI56.656.6
06/01Construction Spending MoM0.80%-1.70%
06/01ISM Manufacturing58.257.3
06/01ISM Employment54.2
06/01ISM Prices Paid7879.3
06/01ISM New Orders61.2
06/01Wards Releases May Auto Data — Excluding GM
06/01Wards Total Vehicle Sales16.70m17.07m