PCE Inflation year-over year
PCE Year-Over-Year Details
PCE bottomed in April of 2024 at 2.3 percent, now 3.5 percent.
Core PCE bottomed in April of 2024 at 2.6 percent, now 3.2 percent.
PCE goods bottomed in September of 2024 at -1.2 percent now 3.8 percent.
PCE services bottomed at 3.3 percent last month, now 3.4 percent.
PCE Month-Over-Month
PCE Inflation year-over year
PCE Month-Over-Month Details
PCE: 0.66 percent
Core PCE: 0.29 percent
PCE Goods: 1.43 percent
PCE Services: 0.32 percent
Much of the jump in PCE is oil and goods-related to the war. If you with to ignore that, please note that 3.2 percent annualized is 3.91 percent. The Fed wants 2.0 percent.
Four Measures of Inflation Percent Change Year-Over-Year
There is every reason to believe the bottom is in. Technically and fundamentally I expect higher.
Four Measures of Inflation Percent Change Year-Over-Year Details
CPI and PCE inflation year-over-year detail
Four Measures on Inflation Detail
PCE 3.5 percent
Core PCE: 3.2 percent
CPI: 3.26 percent
Core CPI: 2.6 percent.
AAA National Fuel Prices
Regular gasoline prices are up 27 cents from a week ago.
Expect Continuation
There is no reason to expect any of this to stop.
The administration is feeding Trump the lies he wants to hear, that Iran is on the verge of collapse.
It’s true that Iran is suffering huge damage from the blockade. But so is nearly every gulf state. And so are US farmers regarding diesel and fertilizer prices.
US consumers are downright angry and it reflects in the polls.
Worst Informed President in History
On April 26, the Wall Street Journal reported Trump Says Iran Has Around Three Days Before Oil Pipelines Could Explode
President Trump said Iran has about three days before its oil pipelines risk explosion from being clogged up, as the country grapples with a shortage of storage space for the oil it produces.
Shipments from Iranian ports have been halted during the U.S. blockade of the Strait of Hormuz. That means Iran has to store its oil, but the country’s storage capacity is limited.
Once the pipelines explode, “you can never rebuild it the way it was,” Trump said Sunday on Fox News. “They are under pressure.”
Asked whether Beijing was helping Iran, Trump said he believed China’s assistance has been limited. “I think China could have been much worse than they’ve been,” he said. “I’m not overly disappointed.”
Earlier this month, Trump threatened to impose an additional 50% tariff on China if Beijing were found to be supplying Iran militarily. Economically, China has provided Tehran with a financial lifeline for years by buying most of its oil.
Iran is in pain over its oil wells. You can’t just stop them. Pressure drops they fill with water and other related problems.
Trump sees this a win. It’s not. If Iran’s wells are damaged, that damage is permanent. It will reflect in higher prices at the pump.
And it’s not just Iran’s wells at risk. The whole strait is blocked.
But the sycophants in the administration tell Trump what he wants to hear.
There Is No Off Ramp
There is no off ramp in sight.
Trump makes impossible demands, and expects countries to bow.
In response, Iran did the smart thing, make impossible demands of its own.
The NACHO Trade
The new acronym for this is NACHO. Not a Chance Hormuz Opens.
NACHO has replaced TACO as the meme of the day.
Eventually the pain will be unbearable on someone. That someone is much more likely to be Trump, with unpredictable results.
Ultimately, Trump will have to make some preposterous lie, agree to open the strait and resolve uranium later, or put troops on the ground.
All three of those are losing options for Trump. Meanwhile, until that happens, inflation will keep rising.
The Long Bond Yield Is Signaling a Huge Fear of Inflation
Yesterday, I noted The Long Bond Yield Is Signaling a Huge Fear of Inflation
The 30-year long bond yield is just 17 BPs from a new 18-year high.
Today, there was no follow-through on yields. That means today’s disastrous PCE inflation report was expected and priced in.
But looking ahead, it’s very messy for bonds unless the NACHO trade unexpectedly vanishes.
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