The April PCE report was out this morning. It was hotter than expected. Both PCE and core PCE index went up 0.4% in April. As shown above, YoY changes are higher for both overall PCE and core PCE compared to March, which was not expected. This tells us that inflation is stubbornly sticking around and it’s not going to be an easy fight. The 6-month T-bills are yielding ~5.3% as of today. I won’t be shocked if we have another 25 basis-point rate hike after the June FOMC meeting sans more banking chaos. The second half of 2023 is going to be interesting when people finally come to terms with the higher-for-longer interest rate environment.
