JL Gutierrez
The Atlanta GDP nowcast for Q2 2024 expects an average of 3% of GDP for Q2 2024.
The GDP release scheduled for Thursday, May 30, 2024 is the second look at Q1 2024 GDP and the second estimate is forecasting 1.3% – 1.5%. Shrinkage, which is Part of the GDP version that measures the prices of goods and services, it is expected to reach +3.1% according to the summarying.com calendar.
At a recent JPMorgan luncheon in Oak Brook, Illinois, members of the fixed income team were in attendance, and given all the inflation measurements filling the blogs and social media, I had to ask the team what they thought? Which was the most important inflation measure(s) to follow, and their immediate response was core CPI data and core personal consumption expenditures data.
Friday morning, we got the basic PCE data for April PCE data is expected to come in at +0.2%, while April core PCE data is expected at +0.3%.
Don’t forget “inflation expectations”
One thing you learn from studying money, banking, and economics for that matter, is that while much of the financial media attention is rooted in “inflation data” (actual inflation, which is certainly important), the most telling aspect of inflation is “inflation expectations.” “. One of the only two metrics tracking this crucial measure is the University of Michigan Consumer Confidence data, which was last released on Friday, May 24, 2024.
This chart, cut and pasted from summarying.com, shows the last two points under “key factors” that have pushed down inflation expectations next year and in the longer term. Note in particular the last point under “Key Factors”: that the data shows long-term inflation expectations, both pre- and post-Covid, and note the data.
As for April personal consumption expenditures data on Friday, any hotter-than-normal number would likely send Treasury yields higher and stocks lower, and vice versa, if the data starts to decline, given inflation expectations.
However, without any weakness in economic data, especially the labor market, it is easy to make an argument (and many make it) that core CPI and core PCE inflation data will remain high.
It’s truly a great American economy and stock market on this Memorial Day, May 27, 2024.
Summary/conclusion
Inflation data is now as closely watched as labor market data, and for good reason. Technicians followed by this blog continue to see “unstable” technical support around crude oil, and despite what this week’s inflation data may show, if the price of crude oil falls below $70, it will likely trigger a rally in Treasuries and help… On inflation data in May and June ’24.
Now the opposite also applies: lower-than-expected inflation data this week will be invalidated if crude oil prices rise above $90, with Treasury yields rising, and the S&P 500 likely to correct or stabilize.
The point is that crude oil is still important, often overlooked, but ultimately affects Treasuries and therefore stock prices and impacts measures of inflation.
This Memorial Day 2024, as American citizens, we are blessed with a $27 trillion U.S. economy, a $46 trillion stock market, and a $51 trillion U.S. bond market. Today, we live in the greatest wealth-creating machine in the history of civilization, and the Americans whose service and sacrifice we salute today have truly paid the ultimate price.
None of this is a prediction of inflation data. We’ll have to wait and see what the data holds this week. Past performance is no guarantee of future results. Investing can involve loss of capital even for short periods of time. Readers should gauge their comfort with market volatility and adjust their portfolios accordingly.
Thanks for reading.
Original post
Editor’s note: The summary points for this article were selected by Seeking Alpha editors.
