Rabo: There are Two kinds of Stag Party

Michael Every on Geopolitical Tensions

Market Comments

Authored by Michael Every for Rabobank

We are all invited to two different kinds of ‘Stag Do’ (for those in the US, Bachelor Party), which (for those in Australia) are also a ‘No-Bucks Night’.

April US personal consumption income and spending data on Friday saw the former up 0.3% mo-m as expected, but spending 0.2%, a tick lower, and real personal spending -0.1% vs. 0.1%, meaning inflation was biting. The core measure was 0.2% m-o-m, in line, as were the Fed’sfavoured PCE y-o-y deflator at 2.7% and the core at 2.8%, but they remain above the 2% target. However, the Chicago PMI that followed was a disaster at 35.4 vs. 41.6 expected, its lowest reading since Covid lockdowns of May 2020. New orders and order backlogs both fell to May 2020 levels, plunging 9.2 and 8 points, respectively.