Friday, June 25, 2021

Daily Market Report 6/25/21  Big data day today, as we receive the Fed's favorite gauge for inflation, the Personal Consumption Expenditure (PCE).  The Headline PCE rose 0.4% in May, while it's YoY rose from 3.6% in April to 3.9% in May.  The real Inflation, or Core PCE, is derived when you exclude food and energy, which rose 0.5% in May; and it's YoY rose from 3.1% in April to 3.4% in May.  So, the 3.4% is the number that the Fed determines as our inflation on a year-over-year basis.  Typically, they want it at 2.0%; however, they've been stating the bottle neck with the supply chain has created transitory (or temporary) spike in prices (or inflation).  Once the supply chain returns to normal, then inflation will subside.  This will take time!  Let's move on to Consumer Spending, which didn't see anything (0%) in May; and Personal Income dropped 2.0% during the same time.  Also, the Consumer Sentiment dropped a bit in June to 85.5, as inflation sours Consumers moods.  Our next big catalyst for the Markets will be next Friday's Jobs data for June.  Meanwhile, Stocks are Mixed today.  NASDAQ is Down today, as it's made up of mostly Growth Stocks, which are being hurt by today's spike in Yields, as it jumps from the 1.48% range to 1.54% range (testing it's Technical level and 25- and 100 DMA).  This is also, putting pressure on MBS, which is now Down about 8bps, as Lenders are beginning to reprice with worse pricing; so, Mortgage Rates are rising a bit today.

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