The US GDP report revealed personal income growth of a slightly stronger-than-expected 5.1% for total income and 12.5% for disposable income in the first quarter, following related fourth-quarter rates of 7.5% and 8.9%. Fed funds implied futures rose in the wake of data showing an acceleration in core personal consumption expenditures inflation to a still very high 4.9%. This goes against the FOMC criteria for a pause – evidence of a continued trend towards the 2% target. A quarter point rally has been building in the market as evidenced by the May contract at 5.049% while June at 5.115% and July at 5.052%.
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Stuart Coyle
Principal market analyst
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