US MAY EMPIRE STATE FACTORY INDEX FALLS TO -31.8 (lowest since Jan.2023), EST. -3.9
The orders index also slid by the most since April 2020, hitting the lowest level since the start of the year. The shipments gauge plummeted more than 40 points. Source: Bloomberg
The U.S. government's interest expense is now an annualized $928.9 billion
Source: Jeff Weniger
China Inflation Weakens to 2-Year Low on Uneven Recovery
China’s consumer inflation slowed to the weakest pace in two years in April while producer prices fell further into deflation, fueling debate about whether more policy stimulus is needed. The consumer price index rose 0.1% last month from a year earlier, the National Bureau of Statistics said Thursday, reflecting muted domestic demand as well as base effects from last April’s Shanghai lockdown. Core CPI, which excludes volatile food and energy costs, was unchanged at 0.7%. Producer prices fell 3.6% in April as commodity costs softened. The figure was more than March’s drop and deeper than economists had expected. Source: Bloomberg
US inflation continues to cool down
US April CPI inflation +4.9% year/year vs. +5% estiated & +5% in prior month … Core CPI +5.5% year/year vs. +5.5% est. & +5.6% prior
Has the Fed ended the flattening of the US Treasury yield curve?
Yesterday, the Fed hinted that this could be the last rate hike of this cycle, leading some to wonder if the flattening of the US Treasury yield curve is finally over. After the FOMC meeting, the difference between 10-year and 5-year Treasury yields turned positive. It should be noted that this part of the curve was the first to turn negative in March 2022. Will this new trend continue in the weeks and months to come? Source: Bloomberg
ECB: A 25 Basis Point Hike Carved in Stone?
The next ECB meeting is coming up on Thursday and this morning two crucial data points were released. Eurozone core inflation saw a slight decrease in April from 5.7% to 5.6%, marking the first decline in 10 months. This is a positive sign that core inflation is heading in the right direction. Meanwhile, the ECB's bank lending survey indicated that credit standards "tightened considerably" in Q1. This shows that the ECB's monetary policy, which includes rate hikes and quantitative tightening, is starting to have an impact on the system. Source: Bloomberg
US real GDP rose just 1.1%, a big drop from the 2.6% GDP in Q4 and lower than estimates (1.9%)
It was the lowest GDP print since Q2 2022 when growth was negative to the tune of -0.6%... Personal Consumption added 2.48%, up from 0.70% in Q4. Fixed Investment subtracted -0.07%. The big hit was the change in private inventories, which subtracted 2.26% from the GDP print. Net exports were a modest contributor to GDP, adding 0.11%. Government consumption added another 0.81% to the bottom line number, effectively contributing more than 70% of the final print. Source: Bloomberg, www.zerohedge.com
Why are US bond yields moving higher despite GDP growth miss? US Q1 Core PCE is higher than expected
While US GDP Q1 growth rate came in well below expectations, PCE and core PCE prints were unexpectedly hot, the former coming in at 4.0% above the 3.7% expected and higher than the 3.9% in Q4, while core PCE came in at 4.9%, well above the 4.4% in Q4 and also hotter than the 4.7% expected. In fact, as shown below, this was the 5th consecutive "beat" of median core PCE expectations.
