Good Morning on this Friday, from your Hometown Lender,

The PCE is the Fed’s favorite inflation gauge.

It was released today and for the first time in months, was right on expectations. After yesterday’s pullback in bonds on concerns of today’s data, we are seeing about 2/3 of those losses clawed back.

It’s good to see things in the green today.

Next week brings the next FOMC meeting and the Fed will share its position on interest rates. There is zero expectation for a rate cut and I think with today’s data the Fed could be cautiously optimistic. It will depend on the future reports (as it always does) but I do think the Fed will be able to cut rates this year at least twice. Markets currently have less than one cut priced in so depending on what the Fed policy statement is on Wednesday; we could see some improvement.

In addition to a glimpse into the future of rates, I am hopeful to hear the Fed discuss slowing down the pace of their bond selling (Quantitative Tightening). If we get both, some soft talk on rates and a pullback on bond sales, it will be Christmas in May 😊. I don’t think the Fed wants markets to get ahead of their skis, so I am hopeful for at least one. With today’s data, I don’t think the Fed will be too hawkish, so there is likely a better chance for rate improvement than further deterioration.

Next week will be interesting.

If you want a single number to capture America’s economic stature, here it is: This year, the U.S. will account for 26.3% of the global gross domestic product, the highest in almost two decades.

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