This week featured significant US economic data, notably the Job Openings and Labor Turnover Survey (JOLTS) report, which showed mixed results. While job openings fell, the quits rate increased, indicating some confidence in the job market. The GDP print for Q1 reflected a quarter-over-quarter decline of -0.3%, driven by a decline in net exports due to rising imports, although consumption and investment remained strong. There is concern that tariffs may be distorting economic data by prompting pre-emptive buying. The Core Personal Consumption Expenditures (PCE) report stayed flat at 0% month-over-month, against expectations of a slight increase. If not for tariff-related inflation fears, inflation rates could be moving towards targets, potentially leading to aggressive interest rate cuts by the Fed. Finally, the ISM Manufacturing PMI results indicated that manufacturing activity remains robust, but rising costs in the prices-paid component pose a threat to projected rate cuts from the Fed.

Source 🔗