PCE stands for personal consumption expenditures price index, and comes with the Core PCE price index, the Federal Reserve's preferred inflation metric.

The PCE declined to 4.2% on a yearly basis in March from 5.1% in February, the US Bureau of Economic Analysis reported. This is a bigger drop than the market expectation of 4.6%.

Meanwhile, economists expected a 4.6% year-over-year rise in the Core PCE price index, and that’s exactly what they got. Indices didn’t react much to this data initially, since it was close to expectations.

Other data released today include Us march personal spending, which was unchanged month on month, in line with expectations at -0.1%. The US employment cost index in the first quarter rose 1.2%, while 1.1% was expected.

Investors are also assessing corporate results, with a few good ones like Exxon Mobil, which posted record first-quarter profit on Friday, more than doubling from the same period a year earlier and beating Wall Street expectations as higher oil and gas production offset lower prices. Chevron also beat expectations for its first-quarter profit, as revenue from its refining business offset lower energy prices and oil and gas production. Intel said Thursday it expects gross margins to improve by more than 40 percent in the second half of the year.

However, Snap disappointed investor after posting lower Q1 revenue and warning that next quarter's results could fall short of expectations, while Pinterest said Thursday it expects revenue growth to be below estimates in the second quarter.

Yesterday, the quarterly figures from Microsoft and Alphabet set Wall Street alight, allowing the Nasdaq to regain levels of gains not seen for several weeks. Two days ago, Meta Platforms took over, delivering a much better than expected report. The result was a 2.8% rise in the Nasdaq 100 yesterday, after a 0.6% gain the day before. So much so that the month of April, which was rather poorly poised for a positive balance, could well turn green. This will depend on today's session, and market reaction to the CPI data. I'm rambling but this is a notoriously popular indicator for the Fed to fine-tune its monetary policy. Yesterday, the market took note of a worse than expected US Q1 GDP. This did not prevent bets of a quarter point rate hike from strengthening to 88% for the decision that the US central bank is due to make next week. The oracles of US finance would like to see a change in rhetoric on this occasion, because the economic slowdown and banking woes, illustrated in real time by the First Republic this week, pose a growing threat of contagion. This calculation is helping to keep equity markets high, as investors are already positioned for the next move. I'm not sure the Fed is very comfortable with this all-out optimism. In any case, it doesn't make it any easier to get its message across.

We switch central banks and continents to visit the Bank of Japan, which overnight kept rates unchanged, as expected, while revising its guidance on the future path of monetary policy. The communication no longer mentions the prospect of the same or lower rates in the future, but it still talks about easing if necessary. Understand who can. The yen plummeted to USD 134.75, so that must mean that the market believes that nothing much will happen and that the BoJ will continue to play the dove until the end of time.

 

Today's economic highlights:

So many things today, including the first estimate of Q1 euro zone inflation, the US Core PCE index and the Chicago PMI, as well as and a second reading of the University of Michigan confidence index. All the agenda is here. 

The dollar gained 0.5% to USD 0.9114 and is up 0.2% to GBP 0.8020. The ounce of gold slips to 1980 dollars. Oil recovers a little, with North Sea Brent at USD 78.90 a barrel and US WTI light crude at USD 75.27. The yield on US 10-year debt has risen to 3.51%. Bitcoin is trading at USD 29,000.

 

In corporate news:

  • Amazon said Thursday it expects its cloud computing business to decline as customers face uncertainty about the economy and cut spending. The outlook overshadowed better-than-expected quarterly revenue and profit. In pre-market trading, the stock was down 2.3 percent.
  • Intel said Thursday it expects gross margins to improve by more than 40 percent in the second half of the year, despite a lower-than-expected revenue forecast for the current quarter. The chipmaker was up 3.4 percent in premarket trading.
  • Exxon Mobil reported record first-quarter profit on Friday, more than doubling from the same period a year earlier and beating Wall Street expectations as higher oil and gas production offset lower prices.
  • Chevron on Friday beat expectations for its first-quarter profit, as revenue from its refining business offset lower energy prices and oil and gas production.
  • Snap on Thursday missed expectations for quarterly revenue as changes to its advertising platform led to a drop in demand for ads, and warned that next quarter's results could also fall short of expectations. The stock was down 17.5% in premarket trading.
  • Pinterest - The photo-sharing social network, facing a decline in ad spending, said Thursday it expects revenue growth to be below estimates in the second quarter. The company was down 14.2 percent in premarket trading.
  • T-Mobile US - The mobile phone operator's quarterly revenue and subscriber numbers disappointed Wall Street estimates on Thursday, hurt by strong competition and a delay in customers upgrading their plans.
  • Gilead Sciences reported a lower-than-expected quarterly profit on Thursday as sales of its COVID-19 antiviral Veklury fell more than expected.
  • First Republic Bank- U.S. officials are urgently coordinating talks to save the U.S. regional bank after private-sector efforts led by First Republic's advisers failed to produce a deal, three sources close to the matter said. The stock was up 11 percent in pre-market trading.
  • Amgen reported a drop in first-quarter profit on Thursday, due to higher expenses and lower revenue from its agreement to manufacture COVID-19 antibody-based treatments for Eli Lilly.

 

Analyst recommendations:

  • Antofagasta: J.P. Morgan downgrades from neutral to underweight, targeting GBp 1230.
  • Capricorn Energy: Stifel downgrades to hold from buy. PT up 9% to 235 pence.
  • Dunelm: Deutsche Bank reinstated coverage with a recommendation of buy. PT up 15% to 1,313 pence.
  • Gilead: Piper Sandler keeps overweight rating. PT up 26% to $105.
  • Intel: Fubon Securities upgrades to neutral from sell. PT up 0.5% to $30.
  • International Paper: RBC Capital Markets upgrades to outperform from sector perform. PT up 18% to $39.
  • Masco: Jefferies upgrades to buy from hold. PT up 23% to $65.
  • Old Dominion: Deutsche Bank upgrades to buy. PT up 12% to $350.
  • Rightmove: Berenberg revert to Hold with a target of GBp 540.
  • ServiceNow: BNP Paribas Exane upgrades to neutral from underperform. PT down 9.8% to $410.