US: Headline and core PCE to slow in May - TDS

Analysts at TDS expects both headline and core PCE of US to slow in May, with the latter slipping to 1.5% y/y on a 0.1% m/m decline in prices.

Key Quotes

“This is in line with the market consensus and consistent with the soft CPI report and falling energy prices. We look for core PCE inflation to slow to 1.4% y/y on a 0.1% m/m increase in prices, both in line with the market. While the deceleration in both headline and core inflation reflects a number of transitory factors, underlying fundamentals remain solid and support inflation firming in the coming months.”

“TD is also in line with the market on personal income and spending and looks for a 0.3% m/m increase in incomes while spending should rise by a more modest 0.1% m/m. The market expects Chicago PMI to decline to 58.0 in June while the final print of University of Michigan Confidence for June should remain unchanged at 94.5.”