A panel discusses the weeks market selloff, driven by inflation fears, rising oil prices and disappointing Big Tech earnings on Barrons Roundtable.
The Federal Reserve’s preferred inflation gauge fell in June, as the pace of price growth pulled back amid volatility in energy markets.
The Commerce Department on Thursday reported that the personal consumption expenditures (PCE) index declined 0.1% on a monthly basis in June and was up 3.7% from a year ago. Both figures were in line with the expectations of economists polled by LSEG.
Core PCE, which excludes volatile measurements of food and energy prices, was up 0.1% on a monthly basis and 3.3% from a year ago. The monthly figure was cooler than the 0.2% predicted by the LSEG poll of economists, while the annual figure was in line with expectations.
FED POLICYMAKERS LEAVE RATES UNCHANGED AMID ELEVATED UNCERTAINTY
Federal Reserve policymakers are focused on the PCE headline figure as they try to bring inflation back to their long-run target of 2%, though they view core data as a better indicator of inflation. Compared with May’s readings, headline PCE declined from 4.1% to 3.7%, while core PCE fell from 3.4% to 3.3%.
Goods prices were up 3% in June compared with one year ago, while they were up 0.7% from the prior month.
Services prices rose 2.3% from a year ago, while they rose 0.3% on a monthly basis.
US ECONOMIC GROWTH SLOWS UNEXPECTEDLY IN SECOND QUARTER
PCE inflation eased but remained elevated in June. (Will Newton/Getty Images)
The personal savings rate as a percentage of disposable personal income was 2.7% in June, down slightly from 2.8% in May.
Since the start of 2025, the personal savings rate has declined from a peak of 5.5% in April 2025, and it began this year at 4.4%.
What experts are saying
Bret Kenwell, U.S. investment analyst at etoro, noted that “June’s in-line PCE report did not show the same cooling reflected in the CPI report earlier this month.”
“Still, investors may be inclined to look past it. The data predates July’s sharp rebound in energy prices, which could put renewed upward pressure on inflation throughout the summer,” Kenwell explained. “As long as tensions continue driving oil prices higher, consumers could face additional pressure at the pump while markets contend with a more complicated inflation outlook.”
FED CHAIR KEVIN WARSH SAYS CENTRAL BANK HAS ‘NO TOLERANCE’ FOR ELEVATED INFLATION
Federal Reserve Chair Kevin Warsh and the FOMC left interest rates unchanged on Wednesday. (Al Drago/Bloomberg via Getty Images)
Ellen Zentner, chief economic strategist for Morgan Stanley Wealth Management, said that, “Despite moderating inflation, strong domestic activity across consumption and business investment will keep the Fed diligent about the risks overheating could have on the inflation trajectory.”
“We continue to expect the Fed to be patient as it waits for more inflation data,” Zentner added.
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