As April comes to a close and as we approach the Memorial Day weekend, it’s time to contemplate the state of our economy. Though this month may not have given us the results we had hoped for, it’s crucial to remember the bigger picture and maintain our optimism.

Personal Consumption Expenditure (PCE) Index

The PCE Index, a measure of inflation, had a rocky month. The numbers for April were slightly hotter than expected on a month-over-month basis and stubbornly stable on a year-over-year basis. This was mainly due to the persistent rise in gasoline and used car prices. However, the upcoming months look promising, with significant decreases anticipated in both areas.

We foresee the June readings for the Consumer Price Index (CPI) to be significantly lower, mirroring a similar trend in the PCE Index.

Personal Income and Spending

On the income and spending front, personal income increased by 0.4%, matching estimates. However, spending rose by 0.8%, a surprise increase. This wasn’t because consumers felt more confident about the economy; it was due to the surge in prices for necessities, particularly energy, and vehicles.

Bond Market

The bond market had its share of challenges. Mortgage bonds were down 11 basis points, continuing a frustrating trend. However, this situation is expected to improve once the current debt ceiling issue is resolved and the selling of bonds by banks subsides.

Market Outlook and Recommendations

Watch for appreciation and jobs data as we look at the rest of the week. Meanwhile, mortgage bonds are currently down 12 basis points, and the 10-year treasury is testing lows seen back in March. However, a rebound could be imminent, especially if we see good job numbers next week.

With the bond market closed early today and on Monday for Memorial Day, we hope you enjoy your Memorial Day weekend, remembering those who gave their lives for our freedom.