US PCE inflation measure tops 4.0pc in May; consumer spending strong | Metals Mine

  • US PCE inflation measure tops 4.0pc in May; consumer spending strong

    From thestandard.com.hk

    US inflation increased further in May, breaking above 4.0 percent for the first time in three years as the Middle East conflict boosted energy prices, and potentially drawing the Federal Reserve closer to raising interest rates this year. The personal consumption expenditures price index surged 4.1 percent in the 12 months through May, the largest increase and first reading above 4.0 percent since April 2023, the Commerce Department's Bureau of Economic Analysis said on Thursday. PCE inflation rose by an unrevised 3.8 percent in April. Economists polled by Reuters had forecast PCE inflation advancing 4.1 percent. The ... (full story)

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Tanisha.fx
4 hr ago
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Why gold is being bought right now:

>Strong US GDP and growth numbers give the Fed breathing room to keep rates steady while they watch the upcoming jobs (NFP) and inflation (CPI) data.
>This lowers the chance of rate hikes, which is pushing US bond yields lower.
>As yields fall, investors are pulling money out of bonds and looking for better returns elsewhere. Gold, being oversold and relatively cheap, is attracting that money, so people are selling bonds and buying gold.
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ww3361
4 hr ago
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Just no.
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Trader#29C9
4 hr ago
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Gold is being bought because it is the ultimate safe haven. It is also the best hedge against inflation, which is still out of control, with no end in sight. Real interest rate is negative and that should start putting pressure on the USD really soon (when looking at the absolute value).

Yields on the debt keep rising across the board due to higher inflation expectations (investors demanding higher yields to compensate for higher inflation).

85% of the central banks expect that their gold reserves will be higher in the next 5 years, as dedolarization continues.

Keeping yields on the debt suppressed (something that the Fed and other central banks are doing) is very negative for the USD. Bonds are being sold across the board (main reason for why yields are rising) and central banks are now the buyers of last resort (keeping yields supressed, so the government doesn't go bankrupt and the economy collapses under high rates).

Supressed rates also encourage the money to go into the stock market (riskier investments).

Higher GDP should theoretically give the Fed yet another reason for why they should hike rates sooner then later.

The premise that stronger GPD is causing the Fed to delay rate hikes further and that that is pushing the yields lower is faulty. Actually, higher growth should have the opposite effect on the yields, and that is to push the yields higher. If investors see that the economy grows faster, yields would then follow suit, especially in an environment where inflation is high/er.

Notion that the Gold is being oversold is something that I entirely agree upon. Also, we have to keep in mind that correlation between rates and the price of gold isn't what it used to be. Negative correlation between the two is fading away rapidly.

All-in-all, glad to see someone actually getting a little deeper into mechanics of it all, rather than just asking whether or when to buy and sell something.

My two cents.
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ww3361
4 hr ago
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more buyers than sellers…

…..always impossible to know anything more than that. You can only speculate.
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notnovice
4 hr ago
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Your analysis seems convincing
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Trader#29C9
5 hr ago
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This will not end well... PPI has surged astronomically higher which is soon going to be seen in the CPI. Furthermore, wages are falling more and more behind the inflation rate. We also have negative real interest rate, so it actually doesn't make sense seeing stronger USD in absolute term at all.

It is not even a guarantee that the Fed will hike rates at this point. Also, even if the Fed would hike rates by 25bps, this literally wouldn't even make a dent on out of control inflation.

The Fed is again too late with hiking rates, and it's questionable whether they'll be able to do anything this time around, as the debt level in the US is also out of control (both government debt and individual debt).
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Trader#67A4
5 hr ago
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Fck Trump
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