US inflation cools

The personal consumption expenditures (PCE) price index rose 0.1% in May, whilst core PCE (excludes food and energy) rose 0.3% and 4.6% from a year earlier. These figures provide a glimmer of progress that US inflation is continuing to ease, and that consumer spending is showing signs of weakness. Though there is evidence that some areas of the economy are becoming more disinflationary, inflation still remains above the Fed's 2% target. In light of that, central banks have indicated that at least two more interest rate hikes are expected this year. US equity markets reacted favourably to the latest PCE print with the S&P 500 and Nasdaq up higher by 1% and 1.5% respectively.