Weekly Investment News
During the holiday-shortened week, the major US equity indices closed lower. The release of the Personal Consumption Expenditures Price Index (PCE), which is the Federal Reserve’s preferred gauge for tracking inflation, showed little change compared to previous months. The PCE index rose by 2.7% in April, unchanged from March. The Core PCE, which excludes volatile food and energy prices, remained at 2.8% for the third consecutive month. Surprisingly, US Consumer Confidence improved in May after declining for the past three months. The index rose to 102.0 from an upwardly revised 97.5 in April, reflecting more positive views about business conditions.
In Europe, major stock indices also experienced declines as eurozone inflation, measured by the Harmonized Index of Consumer Prices (HICP), increased above expectations. Annual inflation in May reached 2.6%, up from 2.4% in April, slightly above the anticipated 2.5%. Core inflation rose to 2.9% from the previous month’s 2.7%, ending a nine-month period of disinflation. Notably, annual energy inflation turned positive for the first time since April 2023. These developments added some uncertainty to the potential easing of policies by the ECB before their upcoming meeting, however consensus expectations remain positive on a 25-basis point cut.
In Germany, annual inflation matched forecasts at 2.4% in April, while the core rate remained at 3.0%. Consumer sentiment in Germany improved to a level not seen in over two years, indicating a positive outlook for the country’s economy. German bond yields remained relatively stable following these releases