Today's Update 06-27-2025

Key Points and Metrics

Key Points and Metrics:

---

Economic Data Releases:

United States:

• Consumer Spending MoM (May):

  • Actual: -0.1%

  • Forecast: 0.1%

  • Previous: 0.2%

• Core PCE Price Index YoY:

  • Actual: 2.7%

  • Forecast: 2.6%

  • Previous: 2.6% (Revised from 2.5%)

• PCE Price Index YoY:

  • Actual: 2.3%

  • Forecast: 2.3%

  • Previous: 2.2% (Revised from 2.1%)

• Core PCE Price Index MoM:

  • Actual: 0.2%

  • Forecast: 0.1%

  • Previous: 0.1%

• Personal Income MoM:

  • Actual: -0.4%

  • Forecast: 0.3%

  • Previous: 0.8%

• Real Personal Consumption MoM:

  • Actual: -0.3%

  • Forecast: 0%

  • Previous: 0.1%

Canada:

• GDP MoM (April 2025):

  • Actual: -0.1%

  • Forecast: 0%

  • Previous: 0.2% (Revised from 0.1%)

Eurozone:

• Consumer Confidence Final:

  • Actual: -15.3

  • Forecast: -15.3

Italy:

• Producer Price Index (PPI) YoY:

  • Actual: 1.7%

  • Previous: 2.6%

• PPI MoM:

  • Actual: -0.7%

  • Previous: -2.2%

• Industrial Sales MoM:

  • Actual: 1.5%

  • Previous: -1.6%

Spain:

• Retail Sales YoY:

  • Actual: 4.8%

  • Forecast: 4.2%

  • Previous: 4.0%

• HICP YoY Flash:

  • Actual: 2.2%

  • Forecast: 2.2%

  • Previous: 2.0%

• CPI YoY Flash:

  • Actual: 2.2%

  • Forecast: 2.1%

  • Previous: 2.0%

France:

• Consumer Confidence:

  • Actual: 96.1

  • Forecast: 97

  • Previous: 96.5

• Consumer Spending MoM:

  • Actual: 0.2%

  • Forecast: 0.1%

  • Previous: 0.3%

Japan:

• Retail Sales YoY:

  • Actual: 2.2%

  • Forecast: 2.5%

  • Previous: 3.3%

• Unemployment Rate:

  • Actual: 2.5%

  • Forecast: 2.5%

• Tokyo Core CPI YoY:

  • Actual: 3.1%

  • Forecast: 3.3%

  • Previous: 3.6%

---

Federal Reserve Commentary:

• Fed's Kashkari:

  • Expects two rate cuts in 2025, with the possible first cut in September.

  • Emphasized focusing on actual inflation and economic data without committing to an easing policy path in case tariff effects are delayed.

  • Noted that more time is needed to determine the impact of the trade war on prices and activity.

---

Trade Developments:

• US-China Relations:

  • US Treasury Secretary Bessent expressed confidence in de-escalation with China.

  • Mentioned that tariffs are at 30% on China, with China's tariffs at 10%.

  • Anticipates that trade could be wrapped up by Labor Day.

  • China and the US have confirmed details on the trade framework during talks in London.

  • China's Commerce Ministry stated that the US will cancel restrictive measures against China, and China will approve export applications in accordance with the law.

• OPEC+:

  • May discuss an output hike on July 6, according to Russia's Novak.

---

Market Movements:

• US Markets:

  • Wall Street is poised to extend its advance toward all-time highs amid hopes for conclusive trade deals and indications of subdued inflation supporting potential Fed rate cuts.

  • S&P 500 futures edged upward, with the index moving closer to record levels.

  • Bonds pared losses; Treasuries slipped after rallying on increased expectations for Fed cuts.

  • The Effective Fed Funds Rate remained at 4.33% on June 26.

• Currency Strength Chart (from strongest to weakest):

  • NZD, EUR, GBP, AUD, JPY, CHF, CAD, USD

---

Other Notable Points:

• People's Bank of China (PBOC):

  • Vows to boost consumption and increase support for technology sectors.

  • Acknowledged that China's economy still sees insufficient domestic demand.

  • Emphasized strengthening counter-cyclical adjustments and increasing the intensity of monetary policy regulation.

• Energy Sector:

  • US Energy Secretary Wright stated that Iran is humbled after recent events and that oil sanctions remain in place.

  • OPEC+ may discuss output levels at the upcoming meeting.

• European Developments:

  • ECB's Knot mentioned that the current rate is at neutral and a good place to be, but didn't exclude the possibility of another rate cut.

  • France's Cognac producers have agreed on a tentative deal with China's commerce ministry on minimum import prices.

---

Upcoming Events:

• Fed Speakers:

  • Fed's Hammack & Cook are scheduled to speak at 09:15 ET.

  • ECB's Cipollone will speak at 12:00 ET.

• Economic Indicators:

  • University of Michigan Sentiment Final at 10:00 ET (Forecast: 60.5).

• Earnings Reports (July 15th):

  • BlackRock (BLK) at 06:00 ET

    • EPS: $10.68

    • Revenue: $5.38B

  • JPMorgan Chase (JPM) at 06:55 ET

    • EPS: $4.43

    • Revenue: $44.1B

  • Wells Fargo (WFC) at 07:00 ET

    • EPS: $1.40

    • Revenue: $20.78B

  • Citigroup (C) at 07:00 ET

    • EPS: $1.65

    • Revenue: $20.77B

---

🏦 Fed Watch

• Kashkari: Expects 2 rate cuts in 2025, possible September start

• Policy Stance: Officials want more data before committing to easing path

• Inflation Focus: Emphasis on actual data vs tariff projections

🌍 Global Highlights

• OPEC+: May discuss output hike July 6th

• Microsoft: MAIA AI chip delayed from 2025 to 2026

• Energy: Iran sanctions remain despite recent strikes

---

Final Thoughts

Today's data presents a mixed but concerning picture for the US economy. The simultaneous decline in consumer spending and personal income, coupled with sticky core inflation, creates a challenging environment for Fed policy makers. While markets are pricing in rate cuts, the inflation data suggests the Fed may need to remain cautious.

The positive trade developments with China provide some relief, but the real test will be whether these preliminary agreements translate into concrete economic benefits. The consumer spending decline is particularly worrying as it represents the backbone of US economic growth.

For investors, this setup suggests continued volatility as markets balance between growth concerns (supporting rate cuts) and inflation persistence (arguing for patience). The September Fed meeting is shaping up to be pivotal, with incoming data between now and then likely to determine the policy path.

Watch for tomorrow's University of Michigan sentiment data and any further Fed commentary for additional market direction clues.

---

Disclaimer: This article is for informational purposes only and does not constitute investment advice. Always do your own research and consider your financial situation before making investment decisions.

---

Like and share. It helps the publication to continue to grow.

Remember what goes up must come down (eventually)
Stay safe and invest wisely and this is in no mean financial advice. [Full Disclaimer]

Thank you for supporting this newsletter. It will keep improving.

Harry