The Day at a Glance | July 28 2023

*The Personal Consumption Expenditures (PCE) deflator in the U.S. recorded its lowest reading in over two years in June. 

*Consumer spending in the U.S. accelerated in June by logging a 0.5% m/m figure, up from the revised 0.2% m/m (revised from 0.1% m/m), surpassing the 0.4% m/m forecasted by the consensus.

*In the Eurozone, the economic sentiment index, which groups consumer and business confidence, recorded slight deterioration in July, but it was greater than analysts’ expectations (forecasted at 95.0) as it declined to 94.5 points from the 95.3 logged in June.

*The Russian ambassador to the U.S. described the relationship between both nations as “virtually non-existent” after the Biden administration agreed to supply Ukraine with cluster bombs, which will be part of the Ukrainian counteroffensive and potentially put Russian civilians at risk.

*Former U.S. President Donald Trump is facing new charges, including deliberate withholding of national defense information and two counts of obstruction.

Economic environment

The Federal Reserve’s favorite inflation indicator, the Personal Consumption Expenditures (PCE) deflator, fell to 3.0% in its annual reading. June´s figure is the lowest since March 2021 and set in line with market expectations. On a monthly basis, the price index logged a 0.2% figure compared to the previous 0.1%, driven by a 0.3% m/m increase in services prices, partially offset by a 0.1% m/m decline in the prices of goods. Additionally, food prices decreased by 0.1% m/m, while a 0.6% m/m increase was recorded in energy prices. Excluding these last two categories (food and energy), the index´s figure set at 0.2% m/m, the same as the analysts´ consensus forecast. With this, annual figures logged an annual -0.6% decrease in the price of goods and a 4.9% annual increase in services prices, while food prices increased by 4.6% year-on-year, and energy prices declined by 18.9% year-on-year. The underlying component recorded an annual 4.1% figure, its lowest level since September 2021. Furthermore, consumer spending recorded a 0.5% m/m figure in June, surpassing the market estimate of 0.4% and accelerated from the 0.2% m/m figure logged in May, which was revised upwards by 0.1 percentage points. In real terms, the reading set at 0.4% m/m.

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