February PCE inflation data reported a little higher than expected

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Published Date 3/28/2025

Overnight the 10 year note yield declined 4 bps from yesterday to 4.33%.

February personal consumption expenditures (PCE) month/month overall expected +0.3%, reported at +0.3%; year/year forecasts +2.5% reported at 2.5%. Overall inflation unchanged from January, but the core excluding food and energy increased more than estimates. Month/month core +0.4% against estimates of +0.3%, year/year core +2.8% with estimates at 2.7% and up from 2.6% in January.

February personal income thought to be +0.4% jumped to +0.8%, the most in a year. January income revised from +0.9% to +0.7%. Personal spending expected at +0.5% was 0.0% and January revised from -0.2% to 0.0%. Spending on goods went up $56.3 billion and that on services rose $31.5 billion. Biggest increases were seen in spending on financial services and insurance ($15 billion), health care ($13.6 billion), motor vehicles and parts ($12.7 billion), food and beverages ($10 billion) and recreational goods and vehicles ($9.9 billion). In contrast, decreases were seen in spending for gasoline and other energy goods ($-6.3 billion), food services and accommodations ($-15 billion), and final expenditures of nonprofit institutions ($-15.8 billion).

Inflation data was key all week, although core inflation increased there was no immediate reaction as traders preferred to focus on year/year numbers. The 10 year note yield at 8:45 am ET 4.31% -5 bps, FNMA 6.0 30 year coupon +9 bps from yesterday. The present consensus about inflation, it will increase.

At 9:30 am the DJIA opened -99, NASDAQ -99, S&P -18. 10 year at 9:30 am 4.31% -6 bps. FNMA 6.0 30 year coupon +6 bps from yesterday’s close and +2 bp from 9:30 am yesterday.

At 10 am a fresh look at consumer sentiment with the University of Michigan final March sentiment index; at mid-month, the index at 57.9 and was expected to be unchanged. Consumers not happy seeing their 401Ks lose ground, food prices staying high, inflation for autos will be increasing with tariffs. Employment holding well but consumers remain concerned.

Not expecting much more from the market today.

Source: TBWS

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