Dollar Drops As Fed's Favorite Inflation Indicator Disappoints

Americans spending outpaced their income for the 5th month in a row (after massive revisions), and thanks to those revisions, spending is up even greater than we were told previously...

After revisions, spending growth is its highest since Oct 2014...

 

Both spending and income growth MoM printed as expected +0.4% MoM, but May spending was revised from +0.2% MoM to +0.5% MoM...

Real personal spending missed expectations, rising just 0.3% MoM vs expectation sof a 0.4% rise (but May was revised notably higher).

Income growth was relatively stable (after revisions)...

As the Employment Cost Index rose by 2.8% YoY in Q2 - the highest since Q3 2008...

Leaving the savings rate hovering at a 'healthy' 6.8%...

Thanks to the magic of upward revisions...

But, most interesting is the miss on Core PCE growth, rising 1.9% YoY (below expectations of a 2.0% YoY gain), the same growth as in May...

While we highly doubt this will do anything to shift Powell from his path of "1 hike/quarter until the world implodes", it has sparked some dollar weakness.