May PCE and more ?3

11:28 27-Jun-25


The end of term SCotUS decisions that are being read out right now indicate that the high court is every bit as divided along partisan lines as Congress.  The most important of them is Trump vs Casa where the ruling does nothing to clarify the birthright citizenship issue that the case was supposed to have been about, but slaps down district courts issuing nationwide injunctions against executive orders.  This is actually vaguely positive for the markets in the short term, since it will reduce uncertainty.  In the real world, this will put more emphasis on class action suits, where the plaintiff bears the evidentiary burden of proving prerequisites, thereby increasing costs.

On 6/27/25 09:21, Esekla wrote:
PCE numbers for May had the headline at +0.1% as expected and the core at +0.2% which is a tenth higher.  Spending decreased 0.1% when it was forecast to increase by that much.  Income decreasing 0.4% vs +0.3% expected is the big surprise, but that is primarily due to a drop in social security and farm payments.  I think this report supports a further wait and see attitude from the Fed, and rate cut chances have decreased a bit at CME.  American equity futures seemingly ignored this data, continuing their rise in the wake of news of a trade deal with China being finalized and 10 more imminent.  Currencies have been fairly flat, though, except for the Euro, which rose a third of a percent to €/$1.174.

Perhaps the removal of Section 899 from the budget is also a contributing factor, but fears that the job market is slowly cracking seem to be building under the surface.  I think the numbers above set any negative surprise from the employment reports a week from now up to rock current complacency in a way that these technical and more nuanced numbers may not.

Finally, EchoStar is choosing to make interest payments even though no deal with the FCC has been reached so far.  It says it is doing this to allow more time for resolution.  I see the entire mobile market holding its breath.