• PCE Is Lower Than Expected – that’s our topic on this morning’s Backstage Pass.
• The Fed’s favorite measure of inflation, Personal Consumption Expenditures (PCE), showed that inflation rose 0.6% in May, which was slightly below the estimates of 0.7%. The year over year reading remained at a 40 year high of 6.3%, but did not increase like many expected.
• The core rate, which strips out food and energy prices, rose by 0.3%, also one tenth beneath expectations. Year over year, the index decreased from 4.9% to 4.7%.
• Personal spending rose by 0.2% last month, which was half of the expectations. Additionally, April was revised lower by 0.4%. Before today’s report, the Atlanta Fed was estimated 0% growth in Q2, but with spending lower, which is a big component of GDP, we could see negative revisions to the estimated Q2 GDP.
• Mortgage bonds are reacting positively to the PCE news. They’re up 27bp, the 10y is down 9bp and trading at 3%. Mortgage rates will most likely open better for today.
• That’s all for today. Please like, comment and subscribe. Remember, stay positive, have a great week and we will see you tomorrow.
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