Post

#PCEReaccelerates: The Fed's Favorite Inflation Gauge Just Moved in the Wrong Direction. Core PCE came in at 3.3% year-over-year today — up from 3.2% in March, matching the consensus forecast but accelerating nonetheless. The Fed's 2% target is now 130 basis points away. Bitcoin fell 3.3% to $72,600 on the print — a six-week low. ETF outflows are tracking $2.07 billion for the month of May. The PCE number matters more than CPI to the Fed. It's the gauge Warsh inherited, the one his committee watches most closely, and the one that now shows inflation moving in the wrong direction on his first full week as chair. Core PCE strips out food and energy — meaning the Iran-driven energy shock isn't what's pushing this number. Services inflation and shelter costs are doing the work. The market reaction was immediate and clean. BTC dropped. The dollar strengthened. Rate cut odds for 2026 are now effectively zero. The 30% hike probability that emerged after the double CPI/PPI beat hasn't moved lower. If anything, today's print cements it. The Dell earnings story — $43.8 billion in revenue, up 88%, AI servers sold out through year-end — ran simultaneously with this inflation print. Two data points on the same day: the AI infrastructure buildout is accelerating faster than anyone modeled, and the price of everything is still going up. Warsh has to thread both needles at once. PCE at 3.3% with no Iran deal in sight means June's read could be worse. The next release is June 25. The FOMC meets June 16-17. Those dates now matter more than most. #PCEReaccelerates