Good Friday morning from your Hometown Lender,

Today’s economic data was the most anticipated and important of the week.

The PCE is the Fed’s favorite inflation gauge and with their meeting next week, it was seen as a potential thorn in the Fed’s side should it come in stronger than expected. It was largely in line with expectations. Inflation continues to moderate, and the Fed is on course to cut by September. Amazingly (not really), the ECB and BOE are also now seeing substantial slowing and are expected to also cut in September. Yes, we are in a global economy however, the major western Central Banks tend to be in sync. I do think the economies can have some parallels, however, I also wonder if Central Banks moving in lockstep is also a currency strategy- not allowing any currency to get too weak or too strong.

Along with today’s encouraging PCE reflecting on yesterday’s news, the sharp decline in orders for new durable goods in June suggests a stagnation in the industrial sector, raising doubts about the sustainability of the activity increase implied by Q2 equipment investment in the GDP report.

The economy is slowing. Rates need to come down.

The Fed meets next week with their policy decision on Wednesday and the jobs report, which is the biggest release of the month is Friday. I would like to see the Fed cut then but it is unlikely, unless as I think is often the case, they have advance notice on the jobs report and can look clairvoyant. Typically, the Fed doesn’t tend to jump ahead of market expectations.

Stay safe, enjoy the weekend, and make today great!