Good Friday morning. Breaking: this morning we got the May PCE inflation data (the Fed’s preferred inflation reading) and the results are almost exactly as expected, with the Core Price Index rising .1% m/m, with a y/y reading of 2.6% (which beat by .1%).

Importantly, personal incomes rose .5% on the month (beating estimates of .4%), meaning that over the last year incomes have grown by a healthy 6%.

The equity markets were higher coming into the report and they remain that way, with Dow futures +40 and Nasdaq +70. Gold is up $10/oz to $2346 with the all-important 10 year yield falling to 4.26% this AM.

The chart of 10 yr yields continues to point to lower yields, with a clear top in place from last October (5%), a lower low of 4.73% in late April with a current move through the 200 dma. Our forecast is unchanged from the beginning of 2024 and we continue to expect 2-3 rate cuts from the Fed by year end. The Fed remains too restrictive with a FFR of 5.33%, now more than a full...